0000949353-15-000115.txt : 20150921 0000949353-15-000115.hdr.sgml : 20150921 20150921170817 ACCESSION NUMBER: 0000949353-15-000115 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20150731 FILED AS OF DATE: 20150921 DATE AS OF CHANGE: 20150921 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRINX RESOURCES LTD CENTRAL INDEX KEY: 0001212641 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 980388682 FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-102441 FILM NUMBER: 151117932 BUSINESS ADDRESS: STREET 1: 6360 JACKSON ROAD CITY: ANN ARBOR STATE: MI ZIP: 48103 BUSINESS PHONE: 248-642-0333 MAIL ADDRESS: STREET 1: 6360 JACKSON ROAD CITY: ANN ARBOR STATE: MI ZIP: 48103 10-Q 1 f10q-brinx_07312015.htm BRINX 10-Q 7.31.2015
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2015

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to _______________

333-102441
 (Commission file number)

BRINX RESOURCES LTD.
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction
of incorporation or organization)
 
98-0388682
(IRS Employer
Identification No.)
 
6360 Jackson Road., Ann Arbor, Michigan 48103
(Address of principal executive offices) (Zip Code)

(248) 840-0084
(Registrant's telephone number, including area code)

Not applicable
 (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[x] Yes                          [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[x] Yes                          [  ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]
Accelerated filer [  ]
Non-accelerated filer [  ]
Smaller reporting company [x]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[  ]Yes   [x] No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  24,629,832 shares of Common Stock, $0.001 par value, as of September 9, 2015


BRINX RESOURCES LTD.
INDEX

   
        Page
PART I.
FINANCIAL INFORMATION
 
     
Item 1.
Financial Statements
3
     
 
Balance Sheets
July 31, 2015 (unaudited) and October 31, 2014
4
     
 
Statements of Comprehensive Income/(Loss) (unaudited)
Three and Nine Months Ended July 31, 2015 and 2014
5
     
 
Statements of Cash Flows (unaudited)
Nine Months Ended July 31 2015 and 2014
 
6
     
 
Notes to Financial Statements (unaudited)
7
     
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
17
     
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
23
     
Item 4.
Controls and Procedures
23
     
PART II.
OTHER INFORMATION
 
     
Item 1.
Legal Proceedings
25
     
Item 1A.
Risk Factors
25
     
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
25
     
Item 3.
Defaults Upon Senior Securities
25
     
Item 4.
Mine Safety Disclosures
25
     
Item 5.
Other Information
25
     
Item 6.
Exhibits
26
     
Signatures
 
27

2

Part I.                FINANCIAL INFORMATION

Item 1.                                        Financial Statements
3

 BRINX RESOURCES LTD.
 BALANCE SHEETS
    
         
   
JULY 31,
   
OCTOBER 31,
 
   
2015
   
2014
 
   
(Unaudited)
   
(Audited)
 
 ASSETS
       
         
 Current assets
       
 Cash and cash equivalents
 $
 
15,298
   $
 
109,953
 
 Marketable securities
   
-
     
37,076
 
 Accounts receivable
   
1,748
     
8,579
 
 Prepaid expenses and deposit
   
9,774
     
23,506
 
                 
 Total current assets
   
26,820
     
179,114
 
                 
 Oil and gas interests, full cost method of accounting,
               
net of accumulated depletion
   
300,963
     
951,502
 
                 
Property, plant and equipment(net)
   
387
     
967
 
                 
 Total assets
 $
 
328,170
   $
 
1,131,583
 
                 
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
 Current liabilities
               
 Accounts payable and accrued liabilities
 $
 
5,172
   $
 
54,912
 
                 
 Total current liabilities
   
5,172
     
54,912
 
                 
 Asset retirement obligations
   
37,810
     
34,754
 
                 
 Total liabilities
   
42,982
     
89,666
 
                 
                 
 Stockholders' equity
               
      Preferred stock - $0.001 par value; authorized - 25,000,000 shares
         
            Series A Preferred stock - $0.001 par value; authorized - 1,000,000 shares
         
       Issued and outstanding - 500,001 shares
   
500
     
500
 
                 
      Common stock - $0.001 par value; authorized - 100,000,000 shares
         
      Issued and outstanding - 24,629,832 shares
   
24,630
     
24,630
 
                 
 Capital in excess of par value
   
2,868,057
     
2,868,057
 
                 
 Accumulative other comprehensive loss
   
-
     
(173,020
)
                 
 Retained earnings
   
(2,607,999
)
   
(1,678,250
)
                 
 Total stockholders' equity
   
285,188
     
1,041,917
 
                 
 Total liabilities and stockholders' equity
 $
 
328,170
   $
 
1,131,583
 
                 
                 
The accompanying notes are an integral part of these financial statements.
         
                 
4

 BRINX RESOURCES LTD.
 STATEMENTS OF COMPREHENSIVE (LOSS)
 (UNAUDITED)
       
                 
   
FOR THE THREE MONTHS ENDED
 
FOR THE NINE MONTHS ENDED
 
   
JULY 31,
 
JULY 31,   
   
2015
   
2014
   
2015
   
2014
 
                 
 REVENUES
               
Natural gas and oil sales
 $
 
5,366
   $
 
16,726
   $
 
14,714
   $
 
121,243
 
                                 
 DIRECT COSTS
                               
 Production costs
   
4,913
     
10,466
     
19,961
     
30,568
 
 Depreciation, depletion and accretion
   
6,265
     
7,023
     
25,511
     
52,192
 
 General and administrative
   
15,638
     
116,609
     
269,410
     
347,991
 
 Writedown of natural gas and oil properties
   
-     
     
-     
     
596,203
     
-     
 
 Writeoff of undeveloped minerial interests
   
-     
      
-     
     
-     
     
3,101
 
                                 
 Total Expenses
   
(26,816
)
   
(134,098
)
   
(911,085
)
   
(433,852
)
                                 
 OPERATING (LOSS)
   
(21,450
)
   
(117,372
)
   
(896,371
)
   
(312,609
)
                                 
 OTHER INCOME
                               
 Income from settlement of litigation
   
117,000
     
-     
     
117,000
     
-     
 
 Interest income
   
-     
      
50
     
-     
     
179
 
 Realized (loss) on sale of marketable security
   
-     
     
(10,664
)
   
(150,378
)
   
(10,664
)
                                 
 NET(LOSS)
   
95,550
     
(127,986
)
   
(929,749
)
   
(323,094
)
                                 
 OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
                               
 Unrealized gain (loss) on held for sale of marketable security
   
-     
     
(62,206
)
   
-     
     
110,594
 
                                 
 COMPREHENSIVE (LOSS) FOR THE PERIODS
 $
 
95,550
   $
 
(190,192
)
 $
 
(929,749
)
 $
 
(212,500
)
                                 
 Net Income/(Loss) Per Common Share
                               
                                 
  - Basic
 $
 
0.00
   $
 
(0.01
)
 $
 
(0.04
)
 $
 
(0.01
)
  - Diluted
 $
 
0.00
   $
 
(0.01
)
 $
 
(0.04
)
 $
 
(0.01
)
                                 
Weighted average number of common shares outstanding
                         
                                 
  - Basic
   
24,629,832
     
24,629,832
     
24,629,832
     
24,629,832
 
  - Diluted
   
24,629,832
     
24,629,832
     
24,629,832
     
24,629,832
 
                                 
                                 
The accompanying notes are an integral part of these financial statements.
                                 


 
5

 
 BRINX RESOURCES LTD.
 STATEMENTS OF CASH FLOWS
 (UNAUDITED)
    
      
FOR THE NINE MONTHS ENDED
   
JULY 31,
   
2015
   
2014
 
         
 CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
       
         
 Net (loss)
 $
 
(929,749
)
 $
 
(323,094
)
                 
 Adjustments to reconcile net income to net cash provided by
               
     operating activities:
               
 Depreciation, depletion and accretion
   
25,511
     
52,192
 
 Realized loss on sale of marketable security
   
150,378
     
10,664
 
 Writedown of natural gas and oil properties
   
596,203
     
-     
   
 Writeoff of undeveloped minerial interests
   
-     
     
3,101
 
 Changes in working capital:
               
 Decrease in accounts receivable
   
6,831
     
21,035
 
 Decrease in prepaid expenses and deposit
   
13,732
     
865
 
 Increase / (Decrease) in accounts payable and accrued liabilities
   
(11,573
)
   
(43,843
)
                 
 Net cash (used in) operating activities
   
(148,667
)
   
(279,080
)
                 
 CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
               
                 
 Redemption of Certificate of deposit
   
-     
     
100,000
 
 Sale of marketable security
   
59,718
     
51,241
 
 Sale proceeds of natural gas and oil working interests
   
-     
      
275,148
 
 Payments on oil and gas interests
   
(5,706
)
   
(98,438
)
                 
 Net cash provided by / (used in) investing activities
   
54,012
     
327,951
 
                 
 CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
               
                 
 Net cash provided by /(used in) financing activities
   
-     
     
-     
 
                 
 Net increase / (decrease) in cash
   
(94,655
)
   
48,871
 
                  
 Cash and cash equivalents, beginning of the periods
   
109,953
     
60,812
 
                 
 Cash and cash equivalents, end of the periods
 $
 
15,298
   $
 
109,683
 
                 
                 
 SUPPLEMENTAL CASH FLOW INFORMATION
               
                 
Cash paid for interest
 $
 
-     
   $
 
-     
 
                 
Cash paid for taxes
 $
 
-     
   $
 
-     
 
                 
Income from settlement of litigation
 $
 
117,000
     
-     
 
                 
Accounts payable settled with transfer of well
 $
 
38,167
   $
 
-     
 
                 
 
The accompanying notes are an integral part of these financial statements.
     
                 
 
6

BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 
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 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 nine-month period ended July 31, 2015 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, 2014.

USE OF ESTIMATES

The preparation of financial statement 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.
7

BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 

1.
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 July 31, 2015 and 2014, 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", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.

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 July 31, 2015 and 2014.
 
 

 
8

BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 
1.                  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

INCOME / (LOSS) PER SHARE (continued)

The table below presents the computation of basic and diluted earnings per share for the nine-month periods ended July 31, 2015 and 2014:

   
July 31, 2015
   
July 31, 2014
 
Basic earnings per share computation:
       
 
(Loss) from continuing operations
 
$
(929,749
)
 
$
(323,094
)
Basic shares outstanding
   
24,629,832
     
24,629,832
 
Basic earnings per share
 
$
(0.04
)
 
$
(0.01
)
                 
 
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:
9

BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 

1.                  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

FAIR VALUE (continued)

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, 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, 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.

RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. The Company is currently evaluating the impact this ASU will have on the Company's financial statements.

FASB issued ASU 2014-15 on August 27, 2014, providing guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company currently discloses a going-concern in Note 1 however the Company will evaluate the impact this ASU will have on the financial statements.


10


BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 
1.                   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As shown in the accompanying financial statements, the Company has incurred a net loss of $2,607,499 since inception.  To achieve profitable operations, the Company requires additional capital for obtaining producing oil and gas properties through either the purchase of producing wells or successful exploration activity.  Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options.  However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its properties and, if successful, to commence the sale of its projects under development.  As a result of the foregoing, there exists substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.


2.                  MARKETABLE SECURITIES

During the period ended April 30, 2015, the Company sold its remaining 617,929 shares of Lexaria generating $59,718 in proceeds and realizing a loss of $150,378.


3.                  ACCOUNTS RECEIVABLE

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 July 31, 2015 and October 31, 2014.  Accordingly, no allowance for doubtful accounts or bad debt expense has been recorded.


   
July 31, 2015
   
October 31, 2014
 
Accounts receivable
 
$
1,748
   
$
8,579
 
Less: allowance for doubtful account
   
-
     
-
 
   
$
1,748
   
$
8,579
 

11


BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 

4.
OIL AND GAS INTERESTS

The Company holds the following oil and natural gas interests:
         
   
July 31, 2015
   
October 31, 2014
 
2008-3 Drilling Program, Oklahoma
 
$
314,819
   
$
312,794
 
2009-2 Drilling Program, Oklahoma
   
114,420
     
114,420
 
2009-3 Drilling Program, Oklahoma
   
353,399
     
353,399
 
2009-4 Drilling Program, Oklahoma
   
190,182
     
190,182
 
2010-1 Drilling Program, Oklahoma
   
(47,813
)
   
(47,813
)
Washita Bend 3D, Oklahoma
   
816,628
     
926,598
 
Double T Ranch #1 SWDW, Oklahoma
   
53,632
     
51,816
 
Kings City Prospect, California
   
406,766
     
406,766
 
South Wayne Prospect, Oklahoma
   
61,085
     
61,085
 
PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi
   
(222,123
)
   
(222,123
)
Three Sands Project, Oklahoma
   
555,715
     
555,715
 
Asset retirement cost
   
2,604
     
2,689
 
Less: Accumulated depletion and impairment
   
(2,298,351
)
   
(1,754,026
)
   
$
300,963
   
$
951,502
 
                 

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 July 31, 2015, the total cost of the 2008-3 Drilling Program was $314,819.  The interests are located in Garvin County, Oklahoma.

2009-2 Drilling Program, Oklahoma (continued)

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 July 31, 2015, 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 July 31, 2015, the total cost of the 2009-3 Drilling Program was $353,399.  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 July 31, 2015, the total cost of the 2009-4 Drilling Program was $190,182.  The interests are located in Garvin County, Oklahoma.
12


BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 

4.                  OIL AND GAS INTERESTS (continued)

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%.  

On January 1, 2014, the Company sold all its working interest in Miss Jenny#1-8 from the 2010-1 drilling program for $275,147 less sales commission as part of the sale of 100% of the well by its operator.

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 July 31, 2015, the total costs including seismic costs, was $816,628.

As a result of seismic evaluation and analysis, eight initial prospects at the Washita Bend Project have been identified.  Lucretia #1-14 was the first well drilled on May 14, 2013.  This well was classified as a dry hole on May 27, 2013.  On August 1, 2013, Karges #1-35 was also classified as a dry hole. On September 4, 2013, Carol #1-22 was plugged and abandoned.  The costs of $148,391 associated therewith have been moved to prove properties. During November 2013, Bunch #1-17 started production, the costs of $76,890 have been moved to prove properties. On March 20, 2014, Hamilton 1-5 was plugged and abandoned.  The costs of $44,793 associated therewith have been moved to prove properties.

On December 9, 2014, the Company agreed to forfeit all of its right, title, interest, and ownership of any kind in and to the Washita Bend 3D Exploration Program.  The Company also agreed that Ranken Energy Corporation exchanged Brinx's joint interest billing balance through October 31, 2014 in the amount of $38,167 for all right, title, interest and ownership of any kind in the Bunch#1-17 well and Cross Bow prospect, effective November 1, 2014.  All costs related to this project were moved to the proved property pool during the quarter ending January 3, 2015.

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 July 31, 2015, the cost of the Double T Ranch#1 SWDW was $53,632 and was moved to the proved property pool.

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 July 31, 2015 was $61,085.





13



BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 



4.                  OIL AND GAS INTERESTS (continued)

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 if lower, of unproved interests.  There was $596,203 and $nil impairment cost for the nine-month periods ended July 31, 2015 and 2014, respectively.  The large impairment recorded during the quarter ended January 31, 2015 was primarily related to the termination of our working interest agreement in Washita and all costs being moved to the proved pool.

Depletion

Under the full cost method, depletion is computed on the units of production method based on proved reserves.  Depletion expense recognized was $21,790 and $48,765 for the nine-month periods ended July 31, 2015 and 2014, respectively.

Capitalized Costs
 
   
July 31, 2015
   
October 31, 2014
 
Proved properties
 
$
2,599,313
   
$
2,061,127
 
Unproved properties
   
-
     
644,401
 
Total Proved and Unproved properties    
2,599,313
     
2,705,528
 
Accumulated depletion expense
    (904,493 )    
(921,402
)
Impairment    
(1,393,857
)
   
(832,624
)
Net capitalized cost
 
$
300,963
   
$
951,502
 

Results of Operations

Results of operations for oil and gas producing activities during the nine-month periods ended are as follows:

   
July 31, 2015
   
July 31, 2014
 
Revenues
 
$
14,714
   
$
121,243
 
Production costs
   
(19,961
)
   
(30,568
)
Depletion and accretion
   
(25,511
)
   
(52,192
)
Results of operations (excluding corporate overhead)
 
$
(30,758
)
 
$
38,483
 

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 July 31, 2015 and October 31, 2014, 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
 
 
14


BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 
5.                  ASSET RETIREMENT OBLIGATIONS (continued)

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 nine-month period ended July 31, 2015 and year ended October 31, 2014:

   
July 31, 2015
   
October 31, 2014
 
 Beginning balance
 
$
34,754
   
$
31,636
 
 Liabilities assumed
   
142
     
227
 
 Revisions
   
(227
)
   
(905
)
 Accretion expense
   
3,141
     
3,796
 
 Ending balance
 
$
37,810
   
$
34,754
 

The reclamation obligation relates to the Ard#1-36, Bagwell#1-20, Bagwell#2-20, Miss Gracie#1-18, Joe Murray Farm#1-18, Gehrke#1-24, Jack#1-13, Jackson 1-18, and Double T Ranch 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.

6.                  CAPITAL STOCK

PREFERRED STOCK


The Company has authorized 25,000,000 shares of preferred stock. On February 10, 2012, the Company issued 500,001 Series A preferred stock at par value. During the three months ended July 31, 2015, the holders of the preferred stock returned the shares to treasury for cancellation.




7.                  RELATED PARTY TRANSACTIONS

During the nine-month period ended July 31, 2015 and 2014, the Company entered into the following transactions with related parties:

a)
The Company paid or accrued $15,000 (2014 - $63,000) to a related entity, for administration services.  During the three months ended July 31, 2015, the related entity stopped providing services to the Company.
 
b)
The Company paid or accrued $11,000 (2014 - $121,500) in management fees to the director and President of the Company.  During the three months ended July 31, 2015, the President and Director resigned from the Company.
 
c)
Due to the reversal of past consulting fees to a director which are no longer payable, the Company has a credit of $2,000 (2014 - $27,000) in consulting fees. During the three months ended July 31, 2015, the Director resigned from the Company


15


BRINX RESOURCES LTD.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
 
 
8.                  MAJOR CUSTOMERS

The Company collected $14,621 (2014: $116,918) or 99% (2014: 96%) of its revenues from one of its operators during the nine-month period ended July 31, 2015. As of July 31, 2015, $1,230 (2014: $10,505) was due from this operator.

9.                  CONTINGENCIES

Hamm Litigation

In September 2010, two lawsuits were filed in the District Court of Garvin County in the State of Oklahoma by Harold Hamm ("Hamm") against certain defendants ("Defendants") and consolidated together alleging, among other things, that Hamm owns an interest in two oil and gas leases in Garvin County and is entitled to a 50% participatory interest.  The Company was not named as a party in these legal proceedings, but Hamm's allegations include that he is entitled to a 50% participatory interest in the Joe Murray Farms well drilled as part of the 2009-3 Drilling Program, in which the Company purchased a 6.25% working interest before casing point and 5.0% working interest after casing point.  The Defendants and the Company believe that there is no merit to Hamm's allegations.  In connection with these proceedings, the Defendants were ordered in January 2011 to escrow fifty percent (50%) of the revenues generated within the subject area pending the outcome of these proceedings.  For this reason, fifty percent (50%) of the revenues the Company is entitled to that have been generated by production from the Joe Murray Farms well is being escrowed and there is no assurance that the Company will be able to recover these proceeds.  The Company recognized $ nil in revenue during the nine months ended July 31, 2015, and $7,643 in revenue during the year ended October 31, 2014. As at July 31, 2015, revenue from the Joe Murray Farms totaling $190,476 has not been recognized as revenue and is being escrowed pending the outcome of these proceedings.

Beckett Complaint

In April 2013, Jeffrey R. Beckett, a shareholder of the Company, filed a lawsuit in the District Court of Washoe County, Nevada against the Company, its directors, Kenneth A. Cabianca and George Knight, and a principal of one of the Company's consultants, Sarah Cabianca, generally alleging mismanagement of the Company's affairs by the directors to the detriment of the Company and its shareholders (the "State Lawsuit"). The State Lawsuit seeks the issuance of an injunction, the appointment of a receiver and unspecified damages. In June 2013, Mr. Beckett filed a similar complaint against the same defendants in the United States District Court for the District of Nevada (the "Federal Lawsuit").  Sarah Cabianca has been dismissed from the State Lawsuit and the Federal Lawsuit has been dismissed.  The Company has settled this lawsuit with the result that all the directors and officers have resigned and Jeffery R. Beckett has been appointed to the Board of Directors as Chairman and sole director of the Company.  As part of the settlement the Company was no longer obligated to pay $117,000 in accrued expenses to the former management and directors and thus these expenses have been reversed.
 
10. Subsequent events

On July 20, 2015, Leo Dagle and Joe Thompson were appointed to the Board of Directors.

 
16

 
Item 2.                                        Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are an independent oil and gas company engaged in exploration, development and production of oil and natural gas. As production of these products continues, they will be sold to purchasers in the immediate area where the products are extracted.

Our original business plan was to proceed with the exploration of the Antelope Pass Project to determine whether there were commercially exploitable reserves of gold located on the property comprising the mineral claims.  Based on the geological report and recommendation prepared by Leroy Halterman, who was our geological consultant at that time, we completed geological mapping, sampling and assaying in connection with the first phase of a staged exploration program during the fiscal year ended October 31, 2004.  In 2005, we suspended our activities on the Antelope Pass Project indefinitely in order to focus on our oil and gas properties and we did not conduct any operations or exploration activities on the Antelope Pass Project during the past few years.  The Company allowed the lease to expire during the six months ended January 31, 2014.

Our plan of operations is to continue to produce commercial quantities of oil and gas.

Oil and Gas Properties

"Bbl" is defined herein to mean one stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.

"Mcf" is defined herein to mean one thousand cubic feet of natural gas at standard atmospheric conditions.

"Working interest" is defined herein to mean an interest in an oil and gas lease that gives the owner of the interest the right to drill for and produce oil and gas on the leased acreage and requires the owner to pay a share of the costs of drilling and production operations.  The share of production to which a working interest owner is entitled will always be smaller than the share of costs that the working interest owner is required to bear, with the balance of the production accruing to the mineral owners of royalties.

Note that all production amounts disclosed for the individual properties below are for the Company's working interest.

2008-3 Drilling Program, Oklahoma.  On January 12, 2009, we acquired a 5% working interest in Ranken Energy Corporation's 2008-3 Drilling Program for a total buy-in cost of $28,581.  We 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 total cost of the 2008-3 Drilling Program as of July 31, 2015 was $314,819.  The interests are located in Garvin County, South Central Oklahoma.

This program is composed of four 3-D seismically defined separate prospects with one exploratory well in three of the prospects and two in the fourth prospect.  Targeted pay zones include the prolific Bromide Sands, Viola Limestone, Deese Sandstone and Layton Sandstone.  One of the wells has very similar geology and structure to the Bromide sands in the Owl Creek field.

Five wells were drilled during 2009.  Production casing was set on four of the five wells and the fifth well was deemed non-commercial and was plugged and abandoned.   Two of the four completed wells are still producing commercial quantities of oil and gas, with one of the wells still flowing naturally and producing most of the oil.  One development well was drilled in August of 2011 near the highest producing well in the program.  For the nine months ended July 31, 2015, the three producing wells in this program have produced a total of 99 Bbls of oil and 138 Mcf of natural gas.   For the three months ending July 31, 2015, the three producing wells in the program have produced a total of 20 Bbls of oil and 58 Mcf of natural gas.

2009-2 Drilling Program, Oklahoma.  On June 15, 2009, we acquired a 5% working interest in Ranken Energy Corporation's 2009-2 Drilling Program located in Garvin County, Oklahoma.  As of July 31, 2015, the total
 
17

cost of the 2009-2 Drilling Program was $114,420.  The interests are located in Garvin County, Oklahoma.  A total of three wells were drilled in this program and targeted pay zones that were the same as in the 2008-3 program.  The zones included the prolific Oil Creek, Bromide Sands, Viola, Deese and Layton Sandstone. This program is composed of three 3-D seismically defined separate prospects.   All wells were drilled in the last fiscal quarter of 2009. Two of the wells were deemed non-commercial and were plugged and abandoned.  Production casing was set on one of the three wells and completion efforts have taken place on the third well; however, after testing it was also deemed non-commercial and plugged.
2009-3 Drilling Program, Oklahoma. On August 12, 2009, we acquired a 5% working interest in Ranken Energy Corporation's 2009-3 Drilling Program for a total buy-in cost of $37,775.  We agreed to participate in the drilling operations to casing point in the initial test well on each of four prospects.   The BCP Interest is 6.25% and the ACP Interest is 5.00%.  The total costs incurred, including drilling costs, as of July 31, 2015 was $353,399.  The interests are located in Garvin County, Oklahoma.  Targeted pay zones include the prolific Oil Creek, Bromide Sands, Viola and Deese sands.  This program is composed of four 3-D seismically defined separate prospects with one exploratory well in each of the four prospects.  All four of the wells have been drilled and production casing has been set on all four.  Two of the wells had successful drill stem tests that flowed oil and gas to the surface.  Electric and radiation logs indicate multiple pay zones in all four wells.

One of the four wells in this program was completed in late January 2010 as a flowing oil and gas well.  The well was flowing naturally at rates between 400 and 500 Bbls of fluid per day with an oil cut of between 50% and 70% oil.  Natural gas was being produced at a rate of over 400 Mcf per day.  This well only produced for a few days before snow and ice storms forced shutting the well in because the produced oil and water could not be hauled away from the location and the storage tanks for these liquids were full.  The well is now producing oil and gas with the use of a pumping unit.  The second well that also had a flowing drill stem test was completed in late March 2010 and that well is currently producing oil and natural gas with the use of a pumping unit.  Total production from these two producing wells for the nine months ended July 31, 2015 totaled 91 Bbls of oil and nil Mcf of natural gas. Total production from these two producing wells for the three months ended July 31, 2015 totaled 29 Bbls of oil and nil Mcf of natural gas.

The two remaining wells were completed in late May 2010.  After testing, both wells were deemed to be non-commercial and have been plugged and abandoned.

2009-4 Drilling Program, Oklahoma.  On December 19, 2009, we acquired a 5% working interest in Ranken Energy Corporation's 2009-4 Drilling Program for a total buy-in cost of $13,482.  We agreed to participate in the drilling operations to casing point in the initial test well on each of two prospects.  The BCP Interest is 6.25% and the ACP Interest is 5.00%.  The total costs incurred, including drilling costs, as of July 31, 2015 was $190,182.  The interests are located in Garvin County, Oklahoma.  Targeted pay zones include the prolific Oil Creek, Bromide Sands, Viola and Deese sands.  This program is composed of four 3-D seismically defined separate prospects with one exploratory well in each of the two prospects.

Drilling of the first well started in early February 2010 and reached total depth on February 20, 2010.  The second well drilling started in late February 2010 and reached total depth on April 8, 2010.  Both of the wells intercepted multiple potential productive horizons and production casing was set.  The lowest horizon in the first well flowed oil and gas on a drill stem test.  Weather was initially a problem with heavy rain causing flooding and other delays but both wells have now been completed.  Both wells were treated for a poor cement bond and only one remains in production.  The one well that could not be successfully treated for the poor cement bond was plugged and abandoned.  The other well has been converted to a salt water disposal well.  As of July 31, 2015, there has been no production of hydrocarbons.

2010-1 Program, Oklahoma. On April 23, 2010, we acquired a 5% working interest in Ranken Energy Corporation's 2010-1 Drilling Program for a total buy-in cost of $39,163.  We agreed to participate in the drilling operations to casing point in the initial test well on each of two prospects.   The BCP Interest is 6.25% and the ACP Interest is 5.00%.  The interests are located in Garvin County, Oklahoma.  Targeted pay zones include the prolific Oil Creek, Bromide Sands, Viola and Deese sands.  This program is composed of four 3-D seismically defined separate prospects with one exploratory well in each of the two prospects.
 
 
18


As of late October 2010, all four wells of the four-well program had been drilled.  Three of the wells had production casing set and one well was plugged and abandoned.  The three successful wells intercepted multiple pay zones including the prolific lowest zone.  One well had a flowing drill stem test but the other two wells were not drill stem tested.  All three wells showed excellent porosity, permeability, and hydrocarbon shows.  All three of the wells were completed in the deepest pay zone.  The third well in this program is currently shut-in.  Total production from these wells for the nine months ended July 31, 2015 was 58 Bbls of oil and 589 Mcf of natural gas.  Total production from these wells for the three months ended July 31, 2015 was 19 Bbls of oil and 238 Mcf of natural gas.

On January 1, 2014, we sold all of our working interest in Miss Jenny #1-8 for $275,147 less sales commission as part of the sale of 100% of the well by its operator.

South Wayne Prospect, Oklahoma. On March 14, 2010, we acquired a 5% working interest in Okland Oil's South Wayne prospect for a total buy-in cost of $5,000 and dry hole costs of $32,370.  We agreed to participate in the drilling operations to casing point in the initial test well on each of two prospects.  The BCP Interest is 6.25% and the ACP Interest is 5.00%.  The total cost incurred, including drilling costs, as of July 31, 2015 was $61,085.  The well and related leasehold interests are located in McClain County, Oklahoma.  The well was perforated in July 2010 and immediately started flowing oil at a rate of 200 Bbls per day.  The flow of oil was slowed and stopped due to a buildup of paraffin.  A pumping unit was placed on the well in late August 2010.  Total production for the McPherson well for the nine months ended July 31, 2015 was nil Bbls of oil and nil Mcf of natural gas.  Additional pay zones are located above the currently producing horizon and it is anticipated that these zone will be perforated in the future adding additional production to the well.
Washita Bend 3D Exploration Project, OklahomaOn March 1, 2010, we agreed to participate with a 5% working interest in a 3-D seismic program managed by Ranken Energy Corporation for a buy-in cost of $46,250.  The Oklahoma 3-D seismic program covered approximately 135 square miles in a known oil and gas producing area.   An earlier 2-D seismic program over the same area indicated a number of untested structures.  The 3-D program was designed to refine and better define the structures discovered during the earlier program and pinpoint drill locations.  We participated in the seismic program and the related prospect generation and acquisition phase without any promotion.  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.
All of the project area, which covers approximately 86,350 acres or 135 square miles, was permitted and shot and data acquired.  All initial or first run processing data was completed and interpretation of the data and mapping as well as prospect delineation started.  Title research and leasing on a number of potential prospects was completed.  A total of 5,148 acres of leases were acquired.  As a result of seismic evaluation and analysis, eight initial prospects were identified, with the first well (Lucretia #1-14) drilled on May 14, 2013.  On May 27, 2013, this well was classified as a dry hole.  On August 1, 2013, Karges #1-35 was also classified as a dry hole.  On September 4, 2013, Carol #1-22 was drilled and completed with no economic hydrocarbons present.  The costs associated with this well were moved to the proved property pool.  During November 2013, Bunch #1-17 started production, and the costs of $76,890 were moved to prove properties.  On March 20, 2014, Hamilton #1-5 was plugged and abandoned.  The costs of $44,793 associated therewith have been moved to prove properties.
On December 9, 2014, we agreed to forfeit all of our right, title, interest, and ownership of any kind in and to the Washita Bend 3D Exploration Program.  We also agreed that Ranken Energy Corporation exchanged our joint interest billing balance through October 31, 2014 in the amount of $38,167 for all right, title, interest and ownership of any kind in the Bunch #1-17 well and Cross Bow prospect, effective November 1, 2014.  All costs related to this project were moved to the proved property pool during the quarter ended January 31, 2015.

Double T Ranch#1 SWDW, Oklahoma.  On July 17, 2012, we 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 July 31, 2015, the cost of the Double T Ranch#1 SWDW was $53,632 and was moved to the proved property pool.

King City Oil FieldEffective May 25, 2009, we entered into an agreement with Sunset Exploration to explore for oil and gas on 10,000 acres located in west central California.  The agreement called for us to earn a 20% working interest in the project by funding a maximum of 50% of a $200,000 geophysical survey composed of
 
 
19


 
gravity and seismic surveys and agreeing to carry 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 were to be proportionate to each party's working interest.  The geophysical surveys have been completed and most have been processed and interpreted.  The initial surveys indicated that several more short geophysical survey lines would improve the interpretation.  These additional lines have been completed and subsequently several stages of reprocessing have been applied to the original data.  In midsummer 2011, permitting of the first drill hole began and the well was completed in January 2012.  On April 15, 2013, we elected to plug and abandon this well.  All costs associated with this well have been moved to the proved property pool for depletion.  After further and in-depth evaluation and consultation, we have elected not to participate any further at King City as we deem this project not to be economically viable.  As at July 31, 2015, the total costs were $406,766.
 
Mineral Interests

Antelope Pass.  In 2005, we suspended our activities on the Antelope Pass Project indefinitely in order to focus on our oil and gas properties and we did not conduct any operations or exploration activities on the Antelope Pass Project during the past few years.  The claims were allowed to lapse during the three months ended January 31, 2014.

Results of Operations

Three months ended July 31, 2015 compared to the three months ended July 31, 2014.  We realized revenues of $5,366 during the three months ended July 31, 2015, compared with $16,726 during the three months ended July 31, 2014, a decrease of 68%, due primarily to a decrease in the number of producing wells and the reduction in commodity prices for oil and natural gas.  During the three-month period ended July 31, 2015, 68 Bbls of oil and 296 Mcf of gas (net to our working interest) were produced at our oil and gas properties, as compared to 186 Bbls of oil and 86 Mcf of gas for the three months ended July 31, 2014.  The decrease in production was due primarily to a decrease in the number of producing wells caused by the sale of our interest in the Miss Jenny #1-8, the exchange of the Bunch #1-17 for our outstanding joint interest billing balance, and the natural decline in reserves.
 
We incurred production costs of $4,913 during the three months ended July 31, 2015, compared with $10,466 during the three months ended July 31, 2014, a decrease of 53%.  Our production costs decreased as a result of a decrease in the number of producing wells and a decrease in our oil and gas production.

Our depreciation, depletion and accretion costs were $6,265 during the three months ended July 31, 2015, compared with $7,023 during the three months ended July 31, 2014, a decrease of 11%.  The decrease in these costs is related to the decrease in the reserves of proved oil and gas interests.

Our general and administrative costs decreased to $15,638 for the three months ended July 31, 2015, from $116,609 for the three months ended July 31, 2014.  The decrease of $100,971 is primarily attributable to amounts payable to former directors and officers which are no longer payable due to the change of management.

There was no loss or gain on the sale of marketable security for the three months ended July 31, 2015, as compared to a loss of $10,664 for the three months ended July 31, 2014.  There was no interest earned during the three months ended July 31, 2015 as compared to interest of $50 for the three months ended July 31, 2014.  During the three months ending July 31, 2015 and as part of the settlement of the Beckett litigation, the Company was no longer obligated to pay $117,000 in accrued expenses to the former management and directors and thus these expenses have been reversed.

For the three months ended July 31, 2015, we generated a net income of $95,550 compared to a net loss of $190,192 for the three months ended July 31, 2014.  The decrease in net loss was attributable primarily to the reversal of amounts payable to the previous directors and management.

As a result of our net income for the quarter, we had a retained loss of $2,607,999 at July 31, 2015.
 
 
20


Nine months ended July 31, 2015 compared to the nine months ended July 31, 2014.  We realized revenues of $14,714 during the nine months ended July 31, 2015, compared with $121,243 during the nine months ended July 31, 2014, a decrease of 88%, due primarily to a decrease in the number of producing wells.  During the nine month period ended July 31, 2015, 252 Bbls of oil and 727 Mcf of gas (net to our working interest) were produced at our oil and gas properties, as compared to 1,232 Bbls of oil and 477 Mcf of gas for the nine months ended July 31, 2014.  The decrease in production was due primarily to a decrease in the number of producing wells caused by the sale of our interest in the Miss Jenny #1-8, the exchange of the Bunch #1-17 for our outstanding joint interest billing balance, and the natural decline in reserves.
 
We incurred production costs of $19,961 during the nine months ended July 31, 2015, compared with $30,568 during the nine months ended July 31, 2014, a decrease of 35%.  Our production costs decreased as a result of a decrease in the number of producing wells and a decrease in our oil and gas production.

Our depreciation, depletion and accretion costs were $25,511 during the nine months ended July 31, 2015, compared with $52,192 during the nine months ended July 31, 2014, a decrease of 51%.  The decrease in these costs is related to the decrease in the reserves of proved oil and gas interests.

Our general and administrative costs decreased to $269,410 for the nine months ended July 31, 2015, from $347,991 for the nine months ended July 31, 2014.  The decrease of $78,581 is primarily attributable to amounts payable to former directors and officers which are no longer payable due to the change of management.

We wrote down $596,203 of our natural gas and oil properties during the nine months ended July 31, 2015 due to the third party evaluation of the Company's reserves being significantly less than the book value on the balance sheet.  We wrote off $3,101 in undeveloped mineral interests for the fiscal year ended October 31, 2014, as we allowed our mineral claims to lapse.

We incurred a loss on the sale of marketable security of $150,378 for the nine months ended July 31, 2015, as compared to a loss of $10,664 for the nine months ended July 31, 2014.

For the nine months ended July 31, 2015, we incurred a net loss of $929,749 compared to a net loss of $212,500 for the nine months ended July 31, 2014.  The increase in net loss was attributable primarily to the impairment charge, loss on the sale of marketable security, and decrease in revenues for the period.

Liquidity and Capital Resources
 
As of July 31, 2015, we had cash of $15,298 and a working capital of $21,648, compared to cash of $109,953 and working capital of $124,202 as of October 31, 2014.  The decrease in cash and working capital is due primarily to the loss for the nine months ended July 31, 2015.

During the nine months ended July 31, 2015, operating activities used cash of $148,667, as compared to net cash used of $279,080 for the nine months ended July 31, 2014.  The adjustments of $596,203 for the write down of natural gas and oil properties and $150,378 for the realized loss on sale of marketable security were not enough to offset the net loss of $929,749 for the 2015 period.

Investing activities, primarily the sale of marketable securities, provided cash of $54,012 during the nine months ended July 31, 2015, compared with $327,951 provided during the nine months ended July 31, 2014.  In 2014, payments on oil and gas interests were higher by $92,732, but were offset by $275,148 in proceeds from the sale of our working interest and $100,000 from the redemption of a certificate of deposit.

Off-Balance Sheet Arrangements

As of July 31, 2015, we did not have any off-balance sheet arrangements.  

Critical Accounting Policies
 
      Oil and Gas Interests.  We utilize the full cost method of accounting for oil and gas activities.  Under this
 
 
21

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. Subsequent to October 31, 2014, there have been significant declines in oil prices that may adversely affect our financial position and results of operations.  If the current downward trend in oil prices continues, there is a reasonable likelihood that we could incur impairment to our full cost pool in fiscal 2015 based on the average oil and natural gas price calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the previous 12 month period under the SEC pricing methodology.
Asset Retirement Obligations. We follow 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.  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.  As of July 31, 2015 and October 31, 2014, we recognized the future cost to plug and abandon the gas wells over the estimated useful lives of the wells in accordance with FASB ASC 410-20.  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.  We amortize the amount added to the oil and gas properties and recognize accretion expense in connection with the discounted liability over the remaining life of the respective wells. 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

We amortize the amount added to oil and gas properties and recognize 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 July 31, 2015 and the year ended October 31, 2014:

   
July 31, 2015
   
October 31, 2014
 
Balance, beginning of periods
 
$
$34,754
   
$
31,636
 
Liabilities assumed
   
142
     
227
 
Revisions
   
(227
)
   
(905
)
Accretion expense
   
3,141
     
3,796
 
Balance, end of periods
 
$
37,810
   
$
34,754
 

The reclamation obligation relates to the Ard#1-36, Bagwell#1-20, Bagwell#2-20, Miss Gracie #1-18, Joe Murray Farm #1-18, Gehrke#1-24 and Jack#1-13, Jackson #1-18, and Double T Ranch 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 our accounts as they occur.
 
 
22


Reserve Estimates.  Our estimates of oil and natural gas reserves are projections based on an interpretation of geological and engineering data.  There are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures.  Estimates of the economically   recoverable quantities of oil and natural gas attributable to any particular group of properties, classifications of such reserves based on the risk of recovery, and estimates of the future net cash flows expected therefrom may vary substantially.  Actual production, revenues and expenditures with respect to our reserves will likely vary from estimates, and such variances may be material.

Forward Looking Statements

Certain statements in this Quarterly Report on Form 10-Q as well as statements made by us in periodic press releases and oral statements made by our officials to analysts and shareholders in the course of presentations about the Company, constitute "forward-looking statements".   Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements.  Such factors include, among other things, (1) general economic and business conditions; (2) interest rate changes; (3) the relative stability of the debt and equity markets; (4) government regulations particularly those related to the natural resources industries; (5) required accounting changes; (6) disputes or claims regarding our property interests; and (7) other factors over which we have little or no control.


Item 3.                          Quantitative and Qualitative Disclosures About Market Risk

                 Not required for smaller reporting companies.


Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rule 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act"), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Act is accumulated and communicated to our officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Rule 15d-15 under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2015, being the date of our most recently completed fiscal quarter.  This evaluation was conducted under the supervision and with the participation of our sole officer, Jeff R. Beckett.  Based on this evaluation, Mr. Beckett concluded that the design and operation of our disclosure controls and procedures are not effective because of the following material weaknesses that existed at July 31, 2015:

·
We relied on external consultants for the preparation of our financial statements and reports.  As a result, it was possible that our officer was not able to identify errors and irregularities in the financial statements and reports.
·
We had an officer who was also a director.  Our board of directors consisted of only three members.  Therefore, there was an inherent lack of segregation of duties and a limited independent governing board.
·
We relied on an external consultant for administration functions, some of which do not have standard procedures in place for formal review by our officer.
 

 
23

Changes in Internal Controls Over Financial Reporting

In connection with the evaluation of our internal controls during our last fiscal quarter, our officers have concluded that there were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended July 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


24


Part II.                OTHER INFORMATION

Item 1.                                        Legal Proceedings

Hamm Litigation

In September 2010, two lawsuits were filed in the District Court of Garvin County in the State of Oklahoma by Harold Hamm ("Hamm") against certain defendants ("Defendants") and consolidated together alleging, among other things, that Hamm owns an interest in two oil and gas leases in Garvin County and is entitled to a 50% participatory interest.  We were not named as a party in these legal proceedings, but Hamm's allegations include a claim that he is entitled to a 50% participatory interest in the Joe Murray Farms well drilled as part of the 2009-3 Drilling Program, in which we purchased a 6.25% working interest before casing point and 5.0% working interest after casing point.  We and the Defendants believe that there is no merit to Hamm's allegations.  In connection with these proceedings, the Defendants were ordered in January 2011 to escrow fifty percent (50%) of the revenues generated within the subject area pending the outcome of these proceedings.  For this reason, fifty percent (50%) of the revenues we are entitled to that have been generated by production from the Joe Murray Farms well is being escrowed and there is no assurance that we will be able to recover these proceeds.  The Company recognized $nil in revenue during the nine months ended July 31, 2015, and $7,643 in revenue during the year ended October 31, 2014. As at July 31, 2015, revenue from the Joe Murray Farms totaling $190,476 has not been recognized as revenue and is being escrowed pending the outcome of these proceedings.

Beckett Complaint

In April 2013, Jeffrey R. Beckett, one of our shareholders, filed a lawsuit in the District Court of Washoe County, Nevada against us, our directors, Kenneth A. Cabianca and George Knight, and a principal of one of our consultants, Sarah Cabianca, generally alleging mismanagement of our affairs by our directors to our detriment and the detriment of our shareholders (the "State Lawsuit").  The State Lawsuit seeks the issuance of an injunction, the appointment of a receiver and unspecified damages.  In June 2013, Mr. Beckett filed a similar complaint against the same defendants in the United States District Court for the District of Nevada (the "Federal Lawsuit").  Sarah Cabianca has been dismissed from the State Lawsuit and the Federal Lawsuit has been dismissed.  The Company has settled this lawsuit with the result that all the directors and officers have resigned and Jeffery R. Beckett has been appointed to the Board of Directors as Chairman and sole director of the Company.  As part of the settlement the Company was no longer obligated to pay $117,000 in accrued expenses to the former management and directors and thus these expenses have been reversed.

Item 1A.                                    Risk Factors

Not required for smaller reporting companies.

Item 2.                                        Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.                                        Defaults Upon Senior Securities

None.

Item 4.                                        Mine Safety Disclosures

Not applicable.

Item 5.                                        Other Information

Not applicable.

25


Item 6.                                        Exhibits.

Regulation
S-K Number
 
Exhibit
3.1
Articles of Incorporation (1)
3.2
Certificate of Change Pursuant to NRS 78.209 (2)
3.3
Amendment to the Articles of Incorporation (3)
3.4
Amended and Restated Bylaws (4)
3.5
Amendment to Amended and Restated Bylaws (5)
4.1
Certificate of Designation of Rights, Preferences, and Privileges for Series A Preferred Stock (4)
10.1
Management Consulting Agreement dated February 10, 2012 (5)
31.1
Rule 15d-14(a) Certification of Principal Executive and Financial Officer
32.1
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 and Financial Officer
101*
Financial statements from the Quarterly Report on Form 10-Q of Brinx Resources Ltd. for the quarter ended July 31, 2015, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Comprehensive Income; (iii) the Statements of Cash Flows; (iv) the Statements of Stockholders' Equity; and (v) the Notes to Financial Statements.
                                  
(1) Incorporated by reference to the exhibits to the registrant's registration statement on Form SB-1, file number 333-102441.
(2) Incorporated by reference to the exhibits to the registrant's current report on Form 8-K dated September 26, 2004, filed September 27, 2004.
(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.
(5) Incorporated by reference to the exhibits to the registrant's annual report on Form 10-K for the fiscal year ended October 31, 2011, filed February 14, 2012.

*In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

26

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
BRINX RESOURCES LTD.
 
(Registrant)
 
 
 
 
September 21, 2015
 
 
By: /s/ Jeff R. Beckett                                                                                                                                
 
                  Jeff R. Beckett
 
                  President and Acting Chief Financial Officer
 
                  (principal executive and financial officer)


27
EX-31.1 2 ex311.htm EXHIBIT 31.1 RULE 15-14(A) CERTIFICATION
Exhibit 31.1
RULE 15-14(a) CERTIFICATION
I, Jeff R. Beckett, certify that:
1.                    I have reviewed this quarterly report on Form 10-Q of Brinx Resources Ltd.;
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. As the registrant's sole certifying officer, I am 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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me 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 my 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 my 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. As the registrant's sole certifying officer, I have disclosed, based on my 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.

Date: September 21, 2015
 
/s/  Jeff R. Beckett                                                                                                        
 
Jeff R. Beckett, President and Acting Chief Financial Officer
(principal executive and financial officer)
                                                                                                  
EX-32.1 3 ex321.htm EXHIBIT 32.1 CERTIFICATION

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Brinx Resources Ltd. (the "Company") on Form 10-Q for the quarter ended July 31, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeff R. Beckett, Principal Executive Officer and Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

 
 
 
/s/  Jeff R. Beckett                                                              
Jeff R. Beckett
President and Acting Chief Financial Officer
Principal Executive and Financial Officer
 
Date: September 21, 2015
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style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>(Loss) from continuing operations</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(929,749)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(323,094)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Basic shares outstanding</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>24,629,832</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>24,629,832</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="67%"> <div>Basic earnings per share</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(0.04)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(0.01)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> </div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">INCOME TAXES</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160; Tax provisions are computed in accordance with FASB ASC 740, <i> "Accounting for Income Taxes"</i>.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company applies the provisions of FASB ASC 740-10 <i>"Accounting for Uncertainty in Income Taxes&#160;&#151; an Interpretation"</i>. 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.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">CASH EQUIVALENTS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160; On occasion, the Company may have cash balances in excess of federally insured amounts.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> MARKETABLE SECURITIES AND INVESTMENTS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">All equity Investments are classified as available for sale and any subsequent changes in the fair value are recorded in comprehensive income.&#160; 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.&#160; The fair value of the investments is based on the quoted market price on the closing date of the period.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">FAIR VALUE</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company adopted FASB ASC 820-10-50, <i>"Fair Value Measurements"</i>. 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.&#160; The three levels are defined as follows:</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The carrying amounts reported in the balance sheets for the cash and cash equivalents, 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.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> CONCENTRATION OF CREDIT RISK</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> Financial&#160;instruments&#160;which&#160;potentially&#160;subject&#160;the&#160;Company&#160;to concentrations&#160;of credit risk consist of cash and cash&#160;equivalents, and accounts&#160;receivable.&#160;&#160;The Company maintains cash at one financial institution.&#160;&#160;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.&#160;&#160;The Company believes credit risk associated with cash and cash equivalents to be minimal.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">RECENT ACCOUNTING PRONOUNCEMENTS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter.&#160;The Company is currently evaluating the impact this ASU will have on the Company's financial statements.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">FASB issued ASU 2014-15 on August 27, 2014, providing guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued.&#160;An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company currently discloses a going-concern in Note 1 however the Company will evaluate the impact this ASU will have on the financial statements.</font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> </div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">GOING CONCERN</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; 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Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options.&#160; However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its properties and, if successful, to commence the sale of its projects under development.&#160; As a result of the foregoing, there exists substantial doubt about the Company's ability to continue as a going concern.&#160; These financial statements do not include any adjustments that might result from the outcome of this uncertainty.<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></font></div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; 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VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; 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FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>(Loss) from continuing operations</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(929,749)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(323,094)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Basic shares outstanding</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>24,629,832</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; 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COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(0.04)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; 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FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2008-3 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>314,819</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>312,794</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-2 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>114,420</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>114,420</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-3 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>353,399</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>353,399</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-4 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>190,182</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>190,182</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2010-1 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(47,813)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(47,813)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Washita Bend 3D, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>816,628</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>926,598</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Double T Ranch #1 SWDW, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>53,632</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>51,816</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Kings City Prospect, California</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>406,766</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>406,766</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>South Wayne Prospect, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>61,085</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>61,085</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(222,123)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(222,123)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Three Sands Project, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>555,715</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>555,715</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Asset retirement cost</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>2,604</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>2,689</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Less: Accumulated depletion and impairment</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(2,298,351)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(1,754,026)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>300,963</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>951,502</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> Capitalized Costs</font></strong></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Proved properties</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,599,313</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,061,127</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Unproved properties</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>-</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>644,401</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Total Proved and Unproved properties</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,599,313</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,705,528</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Accumulated depletion expense</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(904,493)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(921,402)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Impairment</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(1,393,857)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(832,624)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Net capitalized cost</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>300,963</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>951,502</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in"> </div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Results of operations for oil and gas producing activities during the nine-month periods ended are as follows:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 700" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Revenues</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>14,714</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>121,243</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Production costs</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(19,961)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(30,568)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Depletion and accretion</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(25,511)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(52,192)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Results of operations (excluding corporate overhead)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(30,758)</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>38,483</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> 0 117000 117000 0 0 <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> </div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.3pt; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"></td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 1.</font></strong></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></strong></div> </td> </tr> </table> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160; The Company holds oil and gas interests in Oklahoma and California.&#160; In 2006, the Company commenced oil and gas production and started earning revenues.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The accompanying financial statements of the Company are unaudited.&#160; In the opinion of management, the financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation.&#160; The results of operations for the nine-month period ended July 31, 2015 are not necessarily indicative of the operating results for the entire year.&#160; 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, 2014.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>USE OF ESTIMATES</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The preparation of financial statement 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.&#160; Actual results could differ from those estimates.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs.&#160; At this time, management knows of no substantial costs from environmental accidents or events for which the Company may be currently liable.&#160; In addition, the Company's oil and gas business makes it vulnerable to changes in prices of crude oil and natural gas.&#160; Such prices have been volatile in the past and can be expected to be volatile in the future.&#160; By definition, proved reserves are based on current oil and gas prices and estimated reserves.&#160;&#160;Price declines reduce the estimated quantity of proved reserves and increase annual depletion expense (which is based on proved reserves).</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>OIL AND GAS INTERESTS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company utilizes the full cost method of accounting for oil and gas activities.&#160; 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.&#160; 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.&#160; Depreciation, depletion and amortization of oil and gas interests are computed on the units of production method based on proved reserves.&#160; Amortizable costs include estimates of future development costs of proved undeveloped reserves.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> Capitalized costs of oil and gas interests may not exceed an amount equal to the present value, discounted at <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 10</font>%, 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.&#160; Should capitalized costs exceed this ceiling, an impairment is recognized.&#160; 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.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>REVENUE RECOGNITION</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160;&#160;Title transfers for crude oil, natural gas and bulk refined products generally occur at pipeline custody points or when a tanker lifting has occurred.&#160;&#160;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.&#160;&#160;Gas imbalances occur when the Company's actual sales differ from its entitlement under existing working interests.&#160;&#160;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.&#160; At July 31, 2015 and 2014, the Company had no overproduced imbalances.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>ACCOUNTS RECEIVABLE</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Accounts receivable are carried at net receivable amounts less an estimate for doubtful accounts.&#160;&#160;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.&#160;&#160;Trade receivables are written off when deemed uncollectible.&#160;&#160;Recoveries of receivables previously written off are recorded when received.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; 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FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>IMPAIRMENT OF LONG-LIVED ASSETS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company has adopted FASB ASC 360 "<i>Accounting&#160;for the&#160;Impairment&#160;or Disposal of Long-Lived&#160;Assets",</i> which requires that long-lived&#160;assets to be held and used be reviewed for&#160;impairment&#160;whenever&#160;events&#160;or changes in circumstances&#160;indicate that the carrying amount of an asset may not be recoverable.&#160;&#160;Oil and gas interests accounted for under the&#160;full cost method are subject to a ceiling test, described above, and are excluded from this requirement.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>ASSET RETIREMENT OBLIGATIONS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company follows FASB ASC 410-20 <i>"Accounting for Asset Retirement Obligations"</i>,&#160;which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160;&#160;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.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>INCOME / (LOSS) PER SHARE</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Basic income/(loss) per share is computed based on the weighted average number of common shares outstanding during each year.&#160; 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.&#160; The dilutive effect of outstanding options was nil as of July 31, 2015 and 2014.</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>The table below presents the computation of basic and diluted earnings per share for the nine-month periods ended July 31, 2015 and 2014:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Basic earnings per share computation:</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="10%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>(Loss) from continuing operations</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(929,749)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(323,094)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Basic shares outstanding</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>24,629,832</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>24,629,832</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="67%"> <div>Basic earnings per share</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(0.04)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(0.01)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>INCOME TAXES</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.&#160; Tax provisions are computed in accordance with FASB ASC 740, <i> "Accounting for Income Taxes"</i>.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company applies the provisions of FASB ASC 740-10 <i>"Accounting for Uncertainty in Income Taxes&#160;&#151; an Interpretation"</i>. 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. 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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.&#160; The three levels are defined as follows:</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.75in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The carrying amounts reported in the balance sheets for the cash and cash equivalents, 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. 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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.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>RECENT ACCOUNTING PRONOUNCEMENTS</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter.&#160;The Company is currently evaluating the impact this ASU will have on the Company's financial statements.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">FASB issued ASU 2014-15 on August 27, 2014, providing guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued.&#160;An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company currently discloses a going-concern in Note 1 however the Company will evaluate the impact this ASU will have on the financial statements.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>GOING CONCERN</font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; 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TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; 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BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>1,748</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>8,579</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="60%"> <div>Less: allowance for doubtful account</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>-</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>-</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="60%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>1,748</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>8,579</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5.</font></strong></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">ASSET RETIREMENT OBLIGATIONS</font></strong></div> </td> </tr> </table> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The Company follows FASB ASC 410-20 "<i>Accounting for Asset Retirement Obligations"</i>&#160; which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.&#160; 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.&#160; As of July&#160;31, 2015 and October 31, 2014, the Company recognized the future cost to plug and abandon the gas wells over the estimated useful lives of the wells in accordance with <i> "Accounting for Asset Retirement Obligations"</i>.&#160; 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.&#160; 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.&#160; 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.&#160; The liability is a discounted liability using a credit-adjusted risk-free rate of <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 12</font>%.&#160; 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.</font></div> </div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">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.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>The information below reflects the change in the asset retirement obligations during the nine-month period ended July 31, 2015 and year ended October 31, 2014:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Beginning balance</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>34,754</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>31,636</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Liabilities assumed</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>142</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>227</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Revisions</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(227)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(905)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Accretion expense</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>3,141</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>3,796</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Ending balance</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>37,810</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>34,754</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></div> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The reclamation obligation relates to the Ard#1-36, Bagwell#1-20, Bagwell#2-20, Miss Gracie#1-18, Joe Murray Farm#1-18, Gehrke#1-24, Jack#1-13, Jackson 1-18, and Double T Ranch at Oklahoma Properties, and McPherson#1-1 well at South Wayne Prospect.&#160; 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.&#160; Such changes will be recorded in the accounts of the Company as they occur.</font></div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.3pt; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"></td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 6.</font></b></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">CAPITAL STOCK</font></b></div> </td> </tr> </table> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;&#160;PREFERRED STOCK</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> </font>&#160;</div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;&#160;The Company has authorized <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 25,000,000</font> shares of preferred stock. On February 10, 2012, the Company issued <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 500,001</font> Series A preferred stock at par value. During the three months ended July 31, 2015, the holders of the preferred stock returned the shares to treasury for cancellation.<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></font></div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <table style="LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.3pt; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"></td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>10.</font></b></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> Subsequent events</font></b></div> </td> </tr> </table> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">On July 20, 2015, Leo Dagle and Joe Thompson were appointed to the Board of Directors.<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></font></div> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both"> </div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both"> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.3pt; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"></td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>9.</font></b></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> CONTINGENCIES</font></b></div> </td> </tr> </table> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Hamm Litigation</font></b></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">In September 2010, two lawsuits were filed in the District Court of Garvin County in the State of Oklahoma by Harold Hamm ("Hamm") against certain defendants ("Defendants") and consolidated together alleging, among other things, that Hamm owns an interest in two oil and gas leases in Garvin County and is entitled to a <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 50</font>% participatory interest.&#160;&#160;The Company was not named as a party in these legal proceedings, but Hamm's allegations include that he is entitled to a 50% participatory interest in the Joe Murray Farms well drilled as part of the 2009-3 Drilling Program, in which the Company purchased a <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 6.25</font>% working interest before casing point and <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5.0</font>% working interest after casing point.&#160;&#160;The Defendants and the Company believe that there is no merit to Hamm's allegations.&#160;&#160;In connection with these proceedings, the Defendants were ordered in January 2011 to escrow fifty percent (50%) of the revenues generated within the subject area pending the outcome of these proceedings.&#160;&#160;For this reason, fifty percent (50%) of the revenues the Company is entitled to that have been generated by production from the Joe Murray Farms well is being escrowed and there is no assurance that the Company will be able to recover these proceeds.&#160;&#160;The Company recognized $ nil in revenue during the nine months ended July 31, 2015, and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">7,643</font> in revenue during the year ended October 31, 2014. As at July 31, 2015, revenue from the Joe Murray Farms totaling $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">190,476</font> has not been recognized as revenue and is being escrowed pending the outcome of these proceedings.</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Beckett Complaint</font></b></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">In April 2013, Jeffrey R. Beckett, a shareholder of the Company, filed a lawsuit in the District Court of Washoe County, Nevada against the Company, its directors, Kenneth A. Cabianca and George Knight, and a principal of one of the Company's consultants, Sarah Cabianca, generally alleging mismanagement of the Company's affairs by the directors to the detriment of the Company and its shareholders (the "State Lawsuit"). The State Lawsuit seeks the issuance of an injunction, the appointment of a receiver and unspecified damages. In June 2013, Mr. Beckett filed a similar complaint against the same defendants in the United States District Court for the District of Nevada (the "Federal Lawsuit").&#160; Sarah Cabianca has been dismissed from the State Lawsuit and the Federal Lawsuit has been dismissed.&#160; The Company has settled this lawsuit with the result that all the directors and officers have resigned and Jeffery R. Beckett has been appointed to the Board of Directors as Chairman and sole director of the Company.&#160; As part of the settlement the Company was no longer obligated to pay $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">117,000</font> in accrued expenses to the former management and directors and thus these expenses have been reversed.<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></font></div> </div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both"> </div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt"></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;CLEAR: both"></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.3pt; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"><b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>8.</font></b></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"><b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> MAJOR CUSTOMERS</font></b></div> </td> </tr> </table> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> </font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;&#160;The Company collected $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">14,621</font> (2014: $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">116,918</font>) or <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">99</font>% (2014: <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">96</font>%) of its revenues from one of its operators during the nine-month period ended July 31, 2015. 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FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Accounts receivable consists of revenues receivable, interest receivable and other receivable.&#160; 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&#160;&#160;an&#160;&#160;estimate for doubtful accounts.&#160; Management considers all accounts receivable to be fully collectible at July 31, 2015 and October 31, 2014.&#160; <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> </font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>Accordingly, no allowance for doubtful accounts or bad debt expense has been recorded.</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 2.25in; WIDTH: 85%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="60%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; 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COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>1,748</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; 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COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>-</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>-</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="60%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>1,748</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>8,579</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; WIDTH: 0.5in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top" width="48"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>7.</font></b></div> </td> <td style="PADDING-BOTTOM: 0in; PADDING-LEFT: 0in; PADDING-RIGHT: 0in; PADDING-TOP: 0in" valign="top"> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <b><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">RELATED PARTY TRANSACTIONS</font></b></div> </td> </tr> </table> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0.6in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">During the nine-month period ended July 31, 2015 and 2014, the Company entered into the following transactions with related parties:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <table style="BORDER-BOTTOM: 0px solid; BORDER-LEFT: 0px solid; LINE-HEIGHT: 115%; WIDTH: 100%; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; BORDER-TOP: 0px solid; BORDER-RIGHT: 0px solid" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr> <td style="BORDER-BOTTOM-COLOR: #000000; TEXT-ALIGN: left; PADDING-BOTTOM: 0in; BORDER-TOP-COLOR: #000000; PADDING-LEFT: 0in; WIDTH: 4%; PADDING-RIGHT: 0in; BORDER-RIGHT-COLOR: #000000; VERTICAL-ALIGN: top; BORDER-LEFT-COLOR: #000000; PADDING-TOP: 0in" valign="top"></td> <td style="PADDING-BOTTOM: 0in; 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FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>The Company holds the following oil and natural gas interests:</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 0.5in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2008-3 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>314,819</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>312,794</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-2 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>114,420</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>114,420</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-3 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>353,399</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>353,399</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2009-4 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>190,182</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>190,182</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>2010-1 Drilling Program, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(47,813)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(47,813)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Washita Bend 3D, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>816,628</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>926,598</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Double T Ranch #1 SWDW, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>53,632</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>51,816</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Kings City Prospect, California</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>406,766</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>406,766</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>South Wayne Prospect, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>61,085</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>61,085</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(222,123)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(222,123)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Three Sands Project, Oklahoma</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>555,715</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; 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FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>2,689</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Less: Accumulated depletion and impairment</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; 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VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>300,963</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; 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Lucretia #1-14 was the first well drilled on May 14, 2013.&#160; This well was classified as a dry hole on May 27, 2013.&#160; On August 1, 2013, Karges #1-35 was also classified as a dry hole. On September 4, 2013, Carol #1-22 was plugged and abandoned.&#160; The costs of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">148,391</font> associated therewith have been moved to prove properties. During November 2013, Bunch #1-17 started production, the costs of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">76,890</font> have been moved to prove properties. On March 20, 2014, Hamilton 1-5 was plugged and abandoned.&#160; The costs of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">44,793</font> associated therewith have been moved to prove properties.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">On December 9, 2014, the Company agreed to forfeit all of its right, title, interest, and ownership of any kind in and to the Washita Bend 3D Exploration Program.&#160; The Company also agreed that Ranken Energy Corporation exchanged Brinx's joint interest billing balance through October 31, 2014 in the amount of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">38,167</font> for all right, title, interest and ownership of any kind in the Bunch#1-17 well and Cross Bow prospect, effective November 1, 2014.&#160; All costs related to this project were moved to the proved property pool during the quarter ending January 3, 2015.</font></font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Double T Ranch#1 SWDW, Oklahoma</font></strong></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">On July 17, 2012, the Company acquired a <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 3.00</font>% working interest in the drilling, completion and operations of the Double T Ranch#1 SWDW located in Garvin County from Ranken Energy Corporation.&#160; At July 31, 2015, the cost of the Double T Ranch#1 SWDW was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">53,632</font> and was moved to the proved property pool.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">South Wayne Prospect, Oklahoma</font></strong></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">On March 14, 2010, the Company acquired a <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5.00</font>% working interest in McPherson#1-1 well for a payment for leasehold, prospect and geophysical fees of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">5,000</font>, and dry hole costs of $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">32,370</font>.&#160;&#160;The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect.&#160;&#160;The BCP Interest is <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 6.25</font>% and the ACP Interest is <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 5.00</font>%.&#160;&#160;The interests 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FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Under the full cost method, the Company is subject to a ceiling test.&#160; This ceiling test determines whether there is an impairment to the proved properties.&#160; The impairment amount represents the excess of capitalized costs over the present value, discounted at <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> 10</font>%, of the estimated future net cash flows from the proven oil and gas reserves plus the cost, or estimated fair market value if lower, of unproved interests.&#160; There was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">596,203</font></font> and $nil impairment cost for the nine-month periods ended July 31, 2015 and 2014, respectively.&#160; The large impairment recorded during the quarter ended January 31, 2015 was primarily related to the termination of our working interest agreement in Washita and all costs being moved to the proved pool.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in"> <strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> Depletion</font></strong></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0in; MARGIN-LEFT: 0in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Under the full cost method, depletion is computed on the units of production method based on proved reserves.&#160; Depletion expense recognized was $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">21,790</font> and $<font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">48,765</font> for the nine-month periods ended July 31, 2015 and 2014, respectively.</font></div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">&#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font 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FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Proved properties</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,599,313</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,061,127</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: 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<div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>644,401</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Total Proved and Unproved properties</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,599,313</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>2,705,528</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Accumulated depletion expense</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(904,493)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(921,402)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Impairment</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(1,393,857)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(832,624)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Net capitalized cost</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>300,963</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>951,502</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> </div> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font> <div style="CLEAR:both;MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></strong></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><strong><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">Results of Operations</font></strong></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt; size: 8.5in 11.0in" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"></font>Results of operations for oil and gas producing activities during the nine-month periods ended are as follows:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt; size: 8.5in 11.0in"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;size: 8.5in 11.0in"> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 700" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Revenues</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>14,714</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>121,243</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Production costs</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(19,961)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(30,568)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Depletion and accretion</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(25,511)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="10%"> <div>(52,192)</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Results of operations (excluding corporate overhead)</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>(30,758)</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>38,483</div> </td> <td style="BORDER-BOTTOM: #000000 3px double; TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> </table> </div> </div> </div><table border="0" style="width:100%; table-layout:fixed;" cellspacing="0" cellpadding="0"><tr><td></td></tr></table> <div style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif "> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt"> </div> <div style="CLEAR:both;FONT-FAMILY: Calibri,sans-serif; MARGIN-BOTTOM: 0pt; MARGIN-LEFT: 0.5in; FONT-SIZE: 11pt" align="justify"><font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt">The information below reflects the change in the asset retirement obligations during the nine-month period ended July 31, 2015 and year ended October 31, 2014:</font></div> <div style="CLEAR:both;TEXT-INDENT: 0.5in; MARGIN: 0in 0in 0pt; FONT-FAMILY: Calibri,sans-serif; FONT-SIZE: 11pt"> <font style="FONT-FAMILY: 'Times New Roman','serif'; FONT-SIZE: 10pt"> &#160;</font></div> <div style="CLEAR:both; FONT-FAMILY:Times New Roman;FONT-SIZE: 10pt;TEXT-ALIGN:Left; TEXT-INDENT: 0in; WIDTH: 100%"> <table style="MARGIN: 0in 0in 0in 1in; WIDTH: 92%; BORDER-COLLAPSE: collapse; OVERFLOW: visible" cellspacing="0" cellpadding="0" align="left"> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="67%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>July&#160;31,&#160;2015</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="white-space:nowrap; BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: right; FONT-STYLE: normal; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="11%" colspan="2"> <div>October&#160;31,&#160;2014</div> </td> <td style="BORDER-BOTTOM: #000000 1px solid; TEXT-ALIGN: center; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Beginning balance</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>34,754</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>$</div> </td> <td style="TEXT-ALIGN: right; FONT-STYLE: normal; PADDING-RIGHT: 4px; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: bottom; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="10%"> <div>31,636</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: middle; BORDER-TOP: #000000 1px solid; FONT-WEIGHT: 400" width="1%"> <div>&#160;</div> </td> </tr> <tr style="HEIGHT: 12px"> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 10pt; VERTICAL-ALIGN: top; FONT-WEIGHT: 400" width="67%"> <div>Liabilities assumed</div> </td> <td style="TEXT-ALIGN: left; FONT-STYLE: normal; FONT-FAMILY: times new roman; COLOR: #000000; FONT-SIZE: 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MAJOR CUSTOMERS (Details Textual) - USD ($)
9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Oct. 31, 2014
Revenue, Major Customer [Line Items]      
Accounts Receivable, Net, Current, Total $ 1,748   $ 8,579
Sales Revenue, Net [Member] | Customer Concentration Risk [Member]      
Revenue, Major Customer [Line Items]      
Revenues $ 14,621 $ 116,918  
Concentration Risk, Percentage 99.00% 96.00%  
Accounts Receivable [Member] | Customer Concentration Risk [Member]      
Revenue, Major Customer [Line Items]      
Accounts Receivable, Net, Current, Total $ 1,230   $ 10,505
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XML 14 R25.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS (Details) - USD ($)
Jul. 31, 2015
Oct. 31, 2014
Jan. 01, 2014
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Asset retirement cost $ 2,604 $ 2,689  
Less: Accumulated depletion and impairment (2,298,351) (1,754,026)  
Oil and Gas Property, Full Cost Method, Net 300,963 951,502  
2008-3 Drilling Program, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 314,819 312,794  
2009-2 Drilling Program, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 114,420 114,420  
2009-3 Drilling Program, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 353,399 353,399  
2009-4 Drilling Program, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 190,182 190,182  
2010-1 Drilling Program, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross (47,813) (47,813) $ 275,147
Washita Bend 3D, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 816,628 926,598  
Double T Ranch #1 SWDW, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 53,632 51,816  
Kings City Prospect California [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross 406,766 406,766  
South Wayne Prospect, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
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]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross (222,123) (222,123)  
Three Sands Project, Oklahoma [Member]      
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]      
Oil and Gas Property, Full Cost Method, Gross $ 555,715 $ 555,715  
XML 15 R9.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS
9 Months Ended
Jul. 31, 2015
Oil and Gas Property [Abstract]  
Oil and Gas Interests [Text Block]
4.
OIL AND GAS INTERESTS
 
The Company holds the following oil and natural gas interests:
 
 
 
July 31, 2015
 
October 31, 2014
 
2008-3 Drilling Program, Oklahoma
 
$
314,819
 
$
312,794
 
2009-2 Drilling Program, Oklahoma
 
 
114,420
 
 
114,420
 
2009-3 Drilling Program, Oklahoma
 
 
353,399
 
 
353,399
 
2009-4 Drilling Program, Oklahoma
 
 
190,182
 
 
190,182
 
2010-1 Drilling Program, Oklahoma
 
 
(47,813)
 
 
(47,813)
 
Washita Bend 3D, Oklahoma
 
 
816,628
 
 
926,598
 
Double T Ranch #1 SWDW, Oklahoma
 
 
53,632
 
 
51,816
 
Kings City Prospect, California
 
 
406,766
 
 
406,766
 
South Wayne Prospect, Oklahoma
 
 
61,085
 
 
61,085
 
PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi
 
 
(222,123)
 
 
(222,123)
 
Three Sands Project, Oklahoma
 
 
555,715
 
 
555,715
 
Asset retirement cost
 
 
2,604
 
 
2,689
 
Less: Accumulated depletion and impairment
 
 
(2,298,351)
 
 
(1,754,026)
 
 
 
$
300,963
 
$
951,502
 
 
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 July 31, 2015, the total cost of the 2008-3 Drilling Program was $314,819.  The interests are located in Garvin County, Oklahoma.
 
2009-2 Drilling Program, Oklahoma (continued)
 
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 July 31, 2015, 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 July 31, 2015, the total cost of the 2009-3 Drilling Program was $353,399.  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 July 31, 2015, 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%.
 
On January 1, 2014, the Company sold all its working interest in Miss Jenny#1-8 from the 2010-1 drilling program for $275,147 less sales commission as part of the sale of 100% of the well by its operator.
 
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 July 31, 2015, the total costs including seismic costs, was $816,628.
 
As a result of seismic evaluation and analysis, eight initial prospects at the Washita Bend Project have been identified.  Lucretia #1-14 was the first well drilled on May 14, 2013.  This well was classified as a dry hole on May 27, 2013.  On August 1, 2013, Karges #1-35 was also classified as a dry hole. On September 4, 2013, Carol #1-22 was plugged and abandoned.  The costs of $148,391 associated therewith have been moved to prove properties. During November 2013, Bunch #1-17 started production, the costs of $76,890 have been moved to prove properties. On March 20, 2014, Hamilton 1-5 was plugged and abandoned.  The costs of $44,793 associated therewith have been moved to prove properties.
 
On December 9, 2014, the Company agreed to forfeit all of its right, title, interest, and ownership of any kind in and to the Washita Bend 3D Exploration Program.  The Company also agreed that Ranken Energy Corporation exchanged Brinx's joint interest billing balance through October 31, 2014 in the amount of $38,167 for all right, title, interest and ownership of any kind in the Bunch#1-17 well and Cross Bow prospect, effective November 1, 2014.  All costs related to this project were moved to the proved property pool during the quarter ending January 3, 2015.
 
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 July 31, 2015, the cost of the Double T Ranch#1 SWDW was $53,632 and was moved to the proved property pool.
 
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 July 31, 2015 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 if lower, of unproved interests.  There was $596,203 and $nil impairment cost for the nine-month periods ended July 31, 2015 and 2014, respectively.  The large impairment recorded during the quarter ended January 31, 2015 was primarily related to the termination of our working interest agreement in Washita and all costs being moved to the proved pool.
 
Depletion
 
Under the full cost method, depletion is computed on the units of production method based on proved reserves.  Depletion expense recognized was $21,790 and $48,765 for the nine-month periods ended July 31, 2015 and 2014, respectively.
 
Capitalized Costs
 
 
 
July 31, 2015
 
October 31, 2014
 
Proved properties
 
$
2,599,313
 
$
2,061,127
 
Unproved properties
 
 
-
 
 
644,401
 
Total Proved and Unproved properties
 
 
2,599,313
 
 
2,705,528
 
Accumulated depletion expense
 
 
(904,493)
 
 
(921,402)
 
Impairment
 
 
(1,393,857)
 
 
(832,624)
 
Net capitalized cost
 
$
300,963
 
$
951,502
 
 
Results of Operations
 
Results of operations for oil and gas producing activities during the nine-month periods ended are as follows:
 
 
 
July 31, 2015
 
July 31, 2014
 
Revenues
 
$
14,714
 
$
121,243
 
Production costs
 
 
(19,961)
 
 
(30,568)
 
Depletion and accretion
 
 
(25,511)
 
 
(52,192)
 
Results of operations (excluding corporate overhead)
 
$
(30,758)
 
$
38,483
 
XML 16 R29.htm IDEA: XBRL DOCUMENT v3.2.0.727
ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)
9 Months Ended 12 Months Ended
Jul. 31, 2015
Oct. 31, 2014
Asset Retirement Obligation [Line Items]    
Beginning balance $ 34,754 $ 31,636
Liabilities assumed 142 227
Revisions (227) (905)
Accretion expense 3,141 3,796
Ending balance $ 37,810 $ 34,754
XML 17 R28.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS (Details Textual) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Jan. 01, 2014
Mar. 14, 2010
Jul. 31, 2015
Jul. 31, 2014
Jul. 31, 2015
Jul. 31, 2014
Oct. 31, 2014
Mar. 20, 2014
Nov. 30, 2013
Sep. 04, 2013
Jul. 17, 2012
Apr. 23, 2010
Mar. 01, 2010
Dec. 19, 2009
Aug. 12, 2009
Jun. 19, 2009
Jan. 12, 2009
Oil and Gas Interests [Line Items]                                  
Depletion, Total         $ 21,790 $ 48,765                      
Impairment Of Proved Properties Discounted Rate         10.00%                        
Impairment of Oil and Gas Properties     $ 0 $ 0 $ 596,203 $ 0                      
Capitalized Costs, Proved Properties     2,599,313   2,599,313   $ 2,061,127                    
2008-3 Drilling Program, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                                 5.00%
Oil and Gas Property, Full Cost Method, Gross     314,819   314,819   312,794                    
2008-3 Drilling Program, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                                 5.00%
2008-3 Drilling Program, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                                 6.25%
2009-2 Drilling Program, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                               5.00%  
Oil and Gas Property, Full Cost Method, Gross     114,420   114,420   114,420                    
2009-2 Drilling Program, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                               5.00%  
2009-2 Drilling Program, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                               6.25%  
2009-3 Drilling Program, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                             5.00%    
Oil and Gas Property, Full Cost Method, Gross     353,399   353,399   353,399                    
2009-3 Drilling Program, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                             5.00%    
2009-3 Drilling Program, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                             6.25%    
2009-4 Drilling Program, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                           5.00%      
Oil and Gas Property, Full Cost Method, Gross     190,182   190,182   190,182                    
2009-4 Drilling Program, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                           5.00%      
2009-4 Drilling Program, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                           6.25%      
2010-1 Drilling Program, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                       5.00%          
Percentage of Oil and Gas Property and Equipment, Sold 100.00%                                
Oil and Gas Property, Full Cost Method, Gross $ 275,147   (47,813)   (47,813)   (47,813)                    
2010-1 Drilling Program, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                       5.00%          
2010-1 Drilling Program, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                       6.25%          
Washita Bend 3D, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                         5.00%        
Capitalized Costs, Proved Properties               $ 44,793 $ 76,890 $ 148,391              
Oil and Gas Property, Full Cost Method, Gross     816,628   816,628   926,598                    
Washita Bend 3D, Oklahoma [Member] | Ranken Energy Corpor [Member]                                  
Oil and Gas Interests [Line Items]                                  
Interest Billing Balance             38,167                    
Washita Bend 3D, Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                         5.00%        
Washita Bend 3D, Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                         5.625%        
Washita Bend 3D, Oklahoma [Member] | Before and After casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                         5.00%        
Double T Ranch 1 Swdw, Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired                     3.00%            
Capitalized Costs, Proved Properties     53,632   53,632                        
Oil and Gas Property, Full Cost Method, Gross     53,632   53,632   51,816                    
South Wayne Prospect Oklahoma [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired   5.00%                              
Dry Hole Cost Of Exploration Projects   $ 32,370                              
Payment For Lease Hold Prospect and Geophysical Fees   $ 5,000                              
Oil and Gas Property, Full Cost Method, Gross     $ 61,085   $ 61,085   $ 61,085                    
South Wayne Prospect Oklahoma [Member] | After Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired   5.00%                              
South Wayne Prospect Oklahoma [Member] | Before Casing Point [Member]                                  
Oil and Gas Interests [Line Items]                                  
Business Acquisition, Percentage of Voting Interests Acquired   6.25%                              
XML 18 R30.htm IDEA: XBRL DOCUMENT v3.2.0.727
ASSET RETIREMENT OBLIGATIONS (Details Textual)
9 Months Ended
Jul. 31, 2015
Asset Retirement Obligation [Line Items]  
Liability, Weighted Average Risk Free Discount Rate 12.00%
XML 19 R31.htm IDEA: XBRL DOCUMENT v3.2.0.727
CAPITAL STOCK (Details Textual) - shares
Jul. 31, 2015
Oct. 31, 2014
Feb. 10, 2012
Class of Stock [Line Items]      
Preferred Stock, Shares Authorized (in shares) 25,000,000 25,000,000  
Series A Preferred Stock [Member]      
Class of Stock [Line Items]      
Preferred Stock, Shares Authorized (in shares) 1,000,000 1,000,000  
Preferred Stock, Shares Issued (in shares) 500,001 500,001 500,001
XML 20 R8.htm IDEA: XBRL DOCUMENT v3.2.0.727
ACCOUNTS RECEIVABLE
9 Months Ended
Jul. 31, 2015
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]
3.
ACCOUNTS RECEIVABLE
 
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 July 31, 2015 and October 31, 2014.  Accordingly, no allowance for doubtful accounts or bad debt expense has been recorded.
 
 
 
July 31, 2015
 
October 31, 2014
 
Accounts receivable
 
$
1,748
 
$
8,579
 
Less: allowance for doubtful account
 
 
-
 
 
-
 
 
 
$
1,748
 
$
8,579
 
XML 21 R32.htm IDEA: XBRL DOCUMENT v3.2.0.727
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($)
9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Affiliated Entity [Member]    
Related Party Transaction [Line Items]    
Related Party Transaction, Amounts of Transaction $ 15,000 $ 63,000
Director and President [Member]    
Related Party Transaction [Line Items]    
Related Party Transaction, Amounts of Transaction 11,000 121,500
Director [Member]    
Related Party Transaction [Line Items]    
Related Party Transaction, Amounts of Transaction $ 2,000 $ 27,000
XML 22 R2.htm IDEA: XBRL DOCUMENT v3.2.0.727
BALANCE SHEETS - USD ($)
Jul. 31, 2015
Oct. 31, 2014
Current assets    
Cash and cash equivalents $ 15,298 $ 109,953
Marketable securities 0 37,076
Accounts receivable 1,748 8,579
Prepaid expenses and deposit 9,774 23,506
Total current assets 26,820 179,114
Oil and gas interests, full cost method of accounting, net of accumulated depletion 300,963 951,502
Property, plant and equipment(net) 387 967
Total assets 328,170 1,131,583
Current liabilities    
Accounts payable and accrued liabilities 5,172 54,912
Total current liabilities 5,172 54,912
Asset retirement obligations 37,810 34,754
Total liabilities 42,982 89,666
Stockholders' equity    
Preferred stock - $0.001 par value; authorized - 25,000,000 shares Series A Preferred stock - $0.001 par value; authorized - 1,000,000 shares Issued and outstanding - 500,001 shares 500 500
Common stock - $0.001 par value; authorized - 100,000,000 shares Issued and outstanding - 24,629,832 shares 24,630 24,630
Capital in excess of par value 2,868,057 2,868,057
Accumulative other comprehensive loss 0 (173,020)
Retained earnings (2,607,999) (1,678,250)
Total stockholders' equity 285,188 1,041,917
Total liabilities and stockholders' equity $ 328,170 $ 1,131,583
XML 23 R6.htm IDEA: XBRL DOCUMENT v3.2.0.727
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
9 Months Ended
Jul. 31, 2015
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 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 nine-month period ended July 31, 2015 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, 2014.
 
USE OF ESTIMATES
 
The preparation of financial statement 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 July 31, 2015 and 2014, 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", which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.
 
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 July 31, 2015 and 2014.
 
The table below presents the computation of basic and diluted earnings per share for the nine-month periods ended July 31, 2015 and 2014:
 
 
 
July 31, 2015
 
July 31, 2014
 
Basic earnings per share computation:
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) from continuing operations
 
$
(929,749)
 
$
(323,094)
 
Basic shares outstanding
 
 
24,629,832
 
 
24,629,832
 
Basic earnings per share
 
$
(0.04)
 
$
(0.01)
 
 
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, 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, 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.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. The Company is currently evaluating the impact this ASU will have on the Company's financial statements.
 
FASB issued ASU 2014-15 on August 27, 2014, providing guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company currently discloses a going-concern in Note 1 however the Company will evaluate the impact this ASU will have on the financial statements.
 
GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
 
As shown in the accompanying financial statements, the Company has incurred a net loss of $2,607,499 since inception.  To achieve profitable operations, the Company requires additional capital for obtaining producing oil and gas properties through either the purchase of producing wells or successful exploration activity.  Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options.  However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its properties and, if successful, to commence the sale of its projects under development.  As a result of the foregoing, there exists substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
XML 24 R22.htm IDEA: XBRL DOCUMENT v3.2.0.727
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Textual) - USD ($)
9 Months Ended
Jul. 31, 2015
Oct. 31, 2014
Organization and Summary of Significant Accounting Policies [Line Items]    
Capitalized Costs, Oil and Gas Producing Activities, Discounted Percentage 10.00%  
Retained Earnings (Accumulated Deficit), Total $ 2,607,999 $ 1,678,250
Property Plant And Equipment Depreciation Methods straight-line method  
Property, Plant and Equipment, Estimated Useful Lives three years  
XML 25 R24.htm IDEA: XBRL DOCUMENT v3.2.0.727
ACCOUNTS RECEIVABLE (Details) - USD ($)
Jul. 31, 2015
Oct. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Accounts receivable $ 1,748 $ 8,579
Less: allowance for doubtful account 0 0
Accounts Receivable, Net, Current $ 1,748 $ 8,579
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MARKETABLE SECURITIES
9 Months Ended
Jul. 31, 2015
Marketable Securities [Abstract]  
Marketable Securities [Text Block]
2.
MARKETABLE SECURITIES
 
During the period ended April 30, 2015, the Company sold its remaining 617,929 shares of Lexaria generating $59,718 in proceeds and realizing a loss of $150,378.
XML 28 R3.htm IDEA: XBRL DOCUMENT v3.2.0.727
BALANCE SHEETS [Parenthetical] - $ / shares
Jul. 31, 2015
Oct. 31, 2014
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 25,000,000 25,000,000
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 24,629,832 24,629,832
Common stock, shares outstanding 24,629,832 24,629,832
Series A Preferred Stock [Member]    
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 500,001 500,001
Preferred stock, shares outstanding 500,001 500,001
XML 29 R17.htm IDEA: XBRL DOCUMENT v3.2.0.727
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
9 Months Ended
Jul. 31, 2015
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 nine-month periods ended July 31, 2015 and 2014:
 
 
 
July 31, 2015
 
July 31, 2014
 
Basic earnings per share computation:
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) from continuing operations
 
$
(929,749)
 
$
(323,094)
 
Basic shares outstanding
 
 
24,629,832
 
 
24,629,832
 
Basic earnings per share
 
$
(0.04)
 
$
(0.01)
 
XML 30 R1.htm IDEA: XBRL DOCUMENT v3.2.0.727
Document And Entity Information - shares
9 Months Ended
Jul. 31, 2015
Sep. 09, 2015
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jul. 31, 2015  
Document Fiscal Year Focus 2015  
Document Fiscal Period Focus Q3  
Entity Registrant Name BRINX RESOURCES LTD  
Entity Central Index Key 0001212641  
Current Fiscal Year End Date --10-31  
Entity Filer Category Smaller Reporting Company  
Trading Symbol BNXR  
Entity Common Stock, Shares Outstanding   24,629,832
XML 31 R18.htm IDEA: XBRL DOCUMENT v3.2.0.727
ACCOUNTS RECEIVABLE (Tables)
9 Months Ended
Jul. 31, 2015
Receivables [Abstract]  
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]
Accordingly, no allowance for doubtful accounts or bad debt expense has been recorded.
 
 
 
July 31, 2015
 
October 31, 2014
 
Accounts receivable
 
$
1,748
 
$
8,579
 
Less: allowance for doubtful account
 
 
-
 
 
-
 
 
 
$
1,748
 
$
8,579
 
XML 32 R4.htm IDEA: XBRL DOCUMENT v3.2.0.727
STATEMENTS OF COMPREHENSIVE (LOSS) - USD ($)
3 Months Ended 9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Jul. 31, 2015
Jul. 31, 2014
REVENUES        
Natural gas and oil sales $ 5,366 $ 16,726 $ 14,714 $ 121,243
DIRECT COSTS        
Production costs 4,913 10,466 19,961 30,568
Depreciation, depletion and accretion 6,265 7,023 25,511 52,192
General and administrative 15,638 116,609 269,410 347,991
Writedown of natural gas and oil properties 0 0 596,203 0
Writeoff of undeveloped minerial interests 0 0 0 3,101
Total Expenses (26,816) (134,098) (911,085) (433,852)
OPERATING (LOSS) (21,450) (117,372) (896,371) (312,609)
OTHER INCOME        
Income from settlement of litigation 117,000 0 117,000 0
Interest income 0 50 0 179
Realized (loss) on sale of marketable security 0 (10,664) (150,378) (10,664)
NET(LOSS) 95,550 (127,986) (929,749) (323,094)
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX        
Unrealized gain (loss) on held for sale of marketable security 0 (62,206) 0 110,594
COMPREHENSIVE (LOSS) FOR THE PERIODS $ 95,550 $ (190,192) $ (929,749) $ (212,500)
Net Income/(Loss) Per Common Share        
- Basic (in dollars per share) $ 0.00 $ (0.01) $ (0.04) $ (0.01)
- Diluted (in dollars per share) $ 0.00 $ (0.01) $ (0.04) $ (0.01)
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
XML 33 R12.htm IDEA: XBRL DOCUMENT v3.2.0.727
RELATED PARTY TRANSACTIONS
9 Months Ended
Jul. 31, 2015
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]
7.
RELATED PARTY TRANSACTIONS
 
During the nine-month period ended July 31, 2015 and 2014, the Company entered into the following transactions with related parties:
 
a)
The Company paid or accrued $15,000 (2014 - $63,000) to a related entity, for administration services.  During the three months ended July 31, 2015, the related entity stopped providing services to the Company. 
 
b)
The Company paid or accrued $11,000 (2014 - $121,500) in management fees to the director and President of the Company.  During the three months ended July 31, 2015, the President and Director resigned from the Company. 
 
c)
Due to the reversal of past consulting fees to a director which are no longer payable, the Company has a credit of $2,000 (2014 - $27,000) in consulting fees. During the three months ended July 31, 2015, the Director resigned from the Company
XML 34 R11.htm IDEA: XBRL DOCUMENT v3.2.0.727
CAPITAL STOCK
9 Months Ended
Jul. 31, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]
6.
CAPITAL STOCK
 
  PREFERRED STOCK
 
 
  The Company has authorized 25,000,000 shares of preferred stock. On February 10, 2012, the Company issued 500,001 Series A preferred stock at par value. During the three months ended July 31, 2015, the holders of the preferred stock returned the shares to treasury for cancellation.
XML 35 R23.htm IDEA: XBRL DOCUMENT v3.2.0.727
MARKETABLE SECURITIES (Details Textual) - USD ($)
6 Months Ended 9 Months Ended
Apr. 30, 2015
Jul. 31, 2015
Jul. 31, 2014
Marketable Securities [Line Items]      
Marketable Securities, Number of Shares Sold (in shares) 617,929    
Proceeds from Sale and Maturity of Marketable Securities $ 59,718 $ 59,718 $ 51,241
Marketable Securities, Unrealized Gain (Loss) $ 150,378    
XML 36 R19.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS (Tables)
9 Months Ended
Jul. 31, 2015
Oil and Gas Exploration and Production Industries Disclosures [Abstract]  
Schedule of Exploratory Wells Drilled [Table Text Block]
The Company holds the following oil and natural gas interests:
 
 
 
July 31, 2015
 
October 31, 2014
 
2008-3 Drilling Program, Oklahoma
 
$
314,819
 
$
312,794
 
2009-2 Drilling Program, Oklahoma
 
 
114,420
 
 
114,420
 
2009-3 Drilling Program, Oklahoma
 
 
353,399
 
 
353,399
 
2009-4 Drilling Program, Oklahoma
 
 
190,182
 
 
190,182
 
2010-1 Drilling Program, Oklahoma
 
 
(47,813)
 
 
(47,813)
 
Washita Bend 3D, Oklahoma
 
 
816,628
 
 
926,598
 
Double T Ranch #1 SWDW, Oklahoma
 
 
53,632
 
 
51,816
 
Kings City Prospect, California
 
 
406,766
 
 
406,766
 
South Wayne Prospect, Oklahoma
 
 
61,085
 
 
61,085
 
PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi
 
 
(222,123)
 
 
(222,123)
 
Three Sands Project, Oklahoma
 
 
555,715
 
 
555,715
 
Asset retirement cost
 
 
2,604
 
 
2,689
 
Less: Accumulated depletion and impairment
 
 
(2,298,351)
 
 
(1,754,026)
 
 
 
$
300,963
 
$
951,502
 
Capitalized Costs Relating to Oil and Gas Producing Activities Disclosure [Table Text Block]
Capitalized Costs
 
 
 
July 31, 2015
 
October 31, 2014
 
Proved properties
 
$
2,599,313
 
$
2,061,127
 
Unproved properties
 
 
-
 
 
644,401
 
Total Proved and Unproved properties
 
 
2,599,313
 
 
2,705,528
 
Accumulated depletion expense
 
 
(904,493)
 
 
(921,402)
 
Impairment
 
 
(1,393,857)
 
 
(832,624)
 
Net capitalized cost
 
$
300,963
 
$
951,502
 
Results of Operations for Oil and Gas Producing Activities Disclosure [Table Text Block]
Results of operations for oil and gas producing activities during the nine-month periods ended are as follows:
 
 
 
July 31, 2015
 
July 31, 2014
 
Revenues
 
$
14,714
 
$
121,243
 
Production costs
 
 
(19,961)
 
 
(30,568)
 
Depletion and accretion
 
 
(25,511)
 
 
(52,192)
 
Results of operations (excluding corporate overhead)
 
$
(30,758)
 
$
38,483
 
XML 37 R15.htm IDEA: XBRL DOCUMENT v3.2.0.727
Subsequent events
9 Months Ended
Jul. 31, 2015
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
10.
Subsequent events
 
On July 20, 2015, Leo Dagle and Joe Thompson were appointed to the Board of Directors.
XML 38 R13.htm IDEA: XBRL DOCUMENT v3.2.0.727
MAJOR CUSTOMERS
9 Months Ended
Jul. 31, 2015
Major Customers [Abstract]  
Major Customers [Text Block]
8.
MAJOR CUSTOMERS
 
  The Company collected $14,621 (2014: $116,918) or 99% (2014: 96%) of its revenues from one of its operators during the nine-month period ended July 31, 2015. As of July 31, 2015, $1,230 (2014: $10,505) was due from this operator.
XML 39 R14.htm IDEA: XBRL DOCUMENT v3.2.0.727
CONTINGENCIES
9 Months Ended
Jul. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]
9.
CONTINGENCIES
 
Hamm Litigation
 
In September 2010, two lawsuits were filed in the District Court of Garvin County in the State of Oklahoma by Harold Hamm ("Hamm") against certain defendants ("Defendants") and consolidated together alleging, among other things, that Hamm owns an interest in two oil and gas leases in Garvin County and is entitled to a 50% participatory interest.  The Company was not named as a party in these legal proceedings, but Hamm's allegations include that he is entitled to a 50% participatory interest in the Joe Murray Farms well drilled as part of the 2009-3 Drilling Program, in which the Company purchased a 6.25% working interest before casing point and 5.0% working interest after casing point.  The Defendants and the Company believe that there is no merit to Hamm's allegations.  In connection with these proceedings, the Defendants were ordered in January 2011 to escrow fifty percent (50%) of the revenues generated within the subject area pending the outcome of these proceedings.  For this reason, fifty percent (50%) of the revenues the Company is entitled to that have been generated by production from the Joe Murray Farms well is being escrowed and there is no assurance that the Company will be able to recover these proceeds.  The Company recognized $ nil in revenue during the nine months ended July 31, 2015, and $7,643 in revenue during the year ended October 31, 2014. As at July 31, 2015, revenue from the Joe Murray Farms totaling $190,476 has not been recognized as revenue and is being escrowed pending the outcome of these proceedings.
 
Beckett Complaint
 
In April 2013, Jeffrey R. Beckett, a shareholder of the Company, filed a lawsuit in the District Court of Washoe County, Nevada against the Company, its directors, Kenneth A. Cabianca and George Knight, and a principal of one of the Company's consultants, Sarah Cabianca, generally alleging mismanagement of the Company's affairs by the directors to the detriment of the Company and its shareholders (the "State Lawsuit"). The State Lawsuit seeks the issuance of an injunction, the appointment of a receiver and unspecified damages. In June 2013, Mr. Beckett filed a similar complaint against the same defendants in the United States District Court for the District of Nevada (the "Federal Lawsuit").  Sarah Cabianca has been dismissed from the State Lawsuit and the Federal Lawsuit has been dismissed.  The Company has settled this lawsuit with the result that all the directors and officers have resigned and Jeffery R. Beckett has been appointed to the Board of Directors as Chairman and sole director of the Company.  As part of the settlement the Company was no longer obligated to pay $117,000 in accrued expenses to the former management and directors and thus these expenses have been reversed.
XML 40 R16.htm IDEA: XBRL DOCUMENT v3.2.0.727
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Jul. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Use of Estimates, Policy [Policy Text Block]
USE OF ESTIMATES
 
The preparation of financial statement 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 Policy [Policy Text Block]
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, Policy [Policy Text Block]
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 July 31, 2015 and 2014, the Company had no overproduced imbalances.
Trade and Other Accounts Receivable, Policy [Policy Text Block]
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.
Property, Plant and Equipment, Policy [Policy Text Block]
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 or Disposal of Long-Lived Assets, Policy [Policy Text Block]
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, Policy [Policy Text Block]
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.
 
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.
Earnings Per Share, Policy [Policy Text Block]
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 July 31, 2015 and 2014.
 
The table below presents the computation of basic and diluted earnings per share for the nine-month periods ended July 31, 2015 and 2014:
 
 
 
July 31, 2015
 
July 31, 2014
 
Basic earnings per share computation:
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) from continuing operations
 
$
(929,749)
 
$
(323,094)
 
Basic shares outstanding
 
 
24,629,832
 
 
24,629,832
 
Basic earnings per share
 
$
(0.04)
 
$
(0.01)
 
Income Tax, Policy [Policy Text Block]
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 and Cash Equivalents, Policy [Policy Text Block]
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.
Investment, Policy [Policy Text Block]
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 of Financial Instruments, Policy [Policy Text Block]
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, 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 Risk, Credit Risk, Policy [Policy Text Block]
CONCENTRATION OF CREDIT RISK
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, 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.
New Accounting Pronouncements, Policy [Policy Text Block]
RECENT ACCOUNTING PRONOUNCEMENTS
 
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which eliminates the transaction- and industry-specific revenue recognition guidance under current GAAP and replaces it with a principle-based approach for determining revenue recognition. Public entities are required to adopt the revenue recognition standard for reporting periods beginning after December 15, 2016, and interim and annual reporting periods thereafter. The Company is currently evaluating the impact this ASU will have on the Company's financial statements.
 
FASB issued ASU 2014-15 on August 27, 2014, providing guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if "conditions or events raise substantial doubt about the entity's ability to continue as a going concern." The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company currently discloses a going-concern in Note 1 however the Company will evaluate the impact this ASU will have on the financial statements.
Going Concern Policy [Policy Text Block]
GOING CONCERN
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
 
As shown in the accompanying financial statements, the Company has incurred a net loss of $2,607,499 since inception.  To achieve profitable operations, the Company requires additional capital for obtaining producing oil and gas properties through either the purchase of producing wells or successful exploration activity.  Management believes that sufficient funding will be available to meet its business objectives including anticipated cash needs for working capital and is currently evaluating several financing options.  However, there can be no assurance that the Company will be able to obtain sufficient funds to continue the development of its properties and, if successful, to commence the sale of its projects under development.  As a result of the foregoing, there exists substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
XML 41 R34.htm IDEA: XBRL DOCUMENT v3.2.0.727
CONTINGENCIES (Details Textual) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Jul. 31, 2015
Jul. 31, 2014
Oct. 31, 2014
Loss Contingencies [Line Items]          
Oil and Gas Revenue $ 5,366 $ 16,726 $ 14,714 $ 121,243  
Income From Settlement Of Litigation $ 117,000 $ 0 $ 117,000 $ 0  
2009-3 Drilling Program, Oklahoma [Member]          
Loss Contingencies [Line Items]          
Percentage Of Pending Outcome Of Legal Proceedings (in percentage)     50.00%    
Oil and Gas Revenue     $ 0   $ 7,643
Oil and Gas Revenue Unrecognized     $ 190,476    
2009-3 Drilling Program, Oklahoma [Member] | Before Casing Point Interest Percentage [Member]          
Loss Contingencies [Line Items]          
Cost Method Investment Ownership Percentage (in percentage)     6.25%    
2009-3 Drilling Program, Oklahoma [Member] | After Casing Point Interest Percentage [Member]          
Loss Contingencies [Line Items]          
Cost Method Investment Ownership Percentage (in percentage)     5.00%    
XML 42 R21.htm IDEA: XBRL DOCUMENT v3.2.0.727
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
3 Months Ended 9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Jul. 31, 2015
Jul. 31, 2014
Basic earnings per share computation:        
(Loss) from continuing operations $ 95,550 $ (127,986) $ (929,749) $ (323,094)
Basic shares outstanding (in shares) 24,629,832 24,629,832 24,629,832 24,629,832
Basic earnings per share (in dollars per share) $ 0.00 $ (0.01) $ (0.04) $ (0.01)
XML 43 R26.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS (Details 1) - USD ($)
Jul. 31, 2015
Oct. 31, 2014
Capitalized Costs Relating to Oil and Gas Producing Activities, by Geographic Area [Line Items]    
Proved properties $ 2,599,313 $ 2,061,127
Unproved properties 0 644,401
Total Proved and Unproved properties 2,599,313 2,705,528
Accumulated depletion expense (904,493) (921,402)
Impairment (1,393,857) (832,624)
Net capitalized cost $ 300,963 $ 951,502
XML 44 R5.htm IDEA: XBRL DOCUMENT v3.2.0.727
STATEMENTS OF CASH FLOWS - USD ($)
9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES    
Net (loss) $ (929,749) $ (323,094)
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation, depletion and accretion 25,511 52,192
Realized loss on sale of marketable security 150,378 10,664
Writedown of natural gas and oil properties 596,203 0
Writeoff of undeveloped minerial interests 0 3,101
Changes in working capital:    
Decrease in accounts receivable 6,831 21,035
Decrease in prepaid expenses and deposit 13,732 865
Increase / (Decrease) in accounts payable and accrued liabilities (11,573) (43,843)
Net cash (used in) operating activities (148,667) (279,080)
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES    
Redemption of Certificate of deposit 0 100,000
Sale of marketable security 59,718 51,241
Sale proceeds of natural gas and oil working interests 0 275,148
Payments on oil and gas interests (5,706) (98,438)
Net cash provided by / (used in) investing activities 54,012 327,951
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES    
Net cash provided by /(used in) financing activities 0 0
Net increase / (decrease) in cash (94,655) 48,871
Cash and cash equivalents, beginning of the periods 109,953 60,812
Cash and cash equivalents, end of the periods 15,298 109,683
SUPPLEMENTAL CASH FLOW INFORMATION    
Cash paid for interest 0 0
Cash paid for taxes 0 0
Income from settlement of litigation 117,000 0
Accounts payable settled with transfer of well $ 38,167 $ 0
XML 45 R10.htm IDEA: XBRL DOCUMENT v3.2.0.727
ASSET RETIREMENT OBLIGATIONS
9 Months Ended
Jul. 31, 2015
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 July 31, 2015 and October 31, 2014, 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 nine-month period ended July 31, 2015 and year ended October 31, 2014:
 
 
 
July 31, 2015
 
October 31, 2014
 
Beginning balance
 
$
34,754
 
$
31,636
 
Liabilities assumed
 
 
142
 
 
227
 
Revisions
 
 
(227)
 
 
(905)
 
Accretion expense
 
 
3,141
 
 
3,796
 
Ending balance
 
$
37,810
 
$
34,754
 
 
The reclamation obligation relates to the Ard#1-36, Bagwell#1-20, Bagwell#2-20, Miss Gracie#1-18, Joe Murray Farm#1-18, Gehrke#1-24, Jack#1-13, Jackson 1-18, and Double T Ranch 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.
XML 46 R27.htm IDEA: XBRL DOCUMENT v3.2.0.727
OIL AND GAS INTERESTS (Details 2) - USD ($)
9 Months Ended
Jul. 31, 2015
Jul. 31, 2014
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items]    
Revenues $ 14,714 $ 121,243
Production costs (19,961) (30,568)
Depletion and accretion (25,511) (52,192)
Results of operations (excluding corporate overhead) $ (30,758) $ 38,483
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ASSET RETIREMENT OBLIGATIONS (Tables)
9 Months Ended
Jul. 31, 2015
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of Change in Asset Retirement Obligation [Table Text Block]
The information below reflects the change in the asset retirement obligations during the nine-month period ended July 31, 2015 and year ended October 31, 2014:
 
 
 
July 31, 2015
 
October 31, 2014
 
Beginning balance
 
$
34,754
 
$
31,636
 
Liabilities assumed
 
 
142
 
 
227
 
Revisions
 
 
(227)
 
 
(905)
 
Accretion expense
 
 
3,141
 
 
3,796
 
Ending balance
 
$
37,810
 
$
34,754