0001493152-19-009691.txt : 20190625 0001493152-19-009691.hdr.sgml : 20190625 20190625162853 ACCESSION NUMBER: 0001493152-19-009691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 74 CONFORMED PERIOD OF REPORT: 20190331 FILED AS OF DATE: 20190625 DATE AS OF CHANGE: 20190625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Trillion Energy International Inc. CENTRAL INDEX KEY: 0001648636 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 474488552 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55539 FILM NUMBER: 19918854 BUSINESS ADDRESS: STREET 1: SUITE 700 STREET 2: 838 WEST HASTINGS STREET CITY: VANCOUVER STATE: A1 ZIP: V6C 0A6 BUSINESS PHONE: 1 (250) 996-421 MAIL ADDRESS: STREET 1: SUITE 700 STREET 2: 838 WEST HASTINGS STREET CITY: VANCOUVER STATE: A1 ZIP: V6C 0A6 FORMER COMPANY: FORMER CONFORMED NAME: Park Place Energy Inc. DATE OF NAME CHANGE: 20150720 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File Number: 000-55539

 

TRILLION ENERGY INTERNATIONAL INC.

(formerly known as Park Place Energy, Inc.)

(Exact name of small business issuer as specified in its charter)

 

Delaware   47-4488552
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

Suite 700, 838 West Hastings Street, Vancouver
British Columbia, Canada
 

V6C 0A6

(Address of principal executive offices)   (Zip Code)

 

(778) 819-8503

Registrant’s telephone number, including area code

 

N/A

(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 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. Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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). Yes [X] 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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer[  ] (Do not check if a smaller reporting company) Smaller reporting company [X]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

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

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: The registrant had 83,623,466 shares of common stock outstanding as of June 17, 2019.

 

 

 

 
 

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

 

Form 10-Q

 

Table of Contents

 

  Caption Page
     
PART I – FINANCIAL INFORMATION 3
Item 1. Financial Statements

3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 25
     
PART II – OTHER INFORMATION 25
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

 

Item 1. Financial Statements

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

Consolidated Balance Sheets

(Expressed in U.S. dollars)

 

   March 31, 2019

   December 31, 2018 
    (unaudited)      
ASSETS          
Current assets:          
Cash  $317,378   $795,520 
Receivables   1,053,305    661,298 
Prepaid expenses and deposits   201,637    296,827 
Total current assets   1,572,320    1,753,645 
           
Oil and natural gas properties, net   6,529,269    6,650,932 
Property and equipment, net   143,346    106,155 
Restricted cash   98,081    102,751 
Note receivable   48,217    49,192 
Total assets  $8,391,233   $8,662,675 
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable and accrued liabilities  $1,366,502   $1,385,394 
Loans payable   389,006    380,068 
Operating lease liability - current   15,465    - 
Total current liabilities   1,770,973    1,765,462 
Asset retirement obligation   4,126,782    4,026,129 
Operating lease liability – long term   35,958    - 
Total liabilities   5,933,713    5,791,591 
Stockholders’ equity:          
Common stock Authorized: 250,000,000 shares, par value $0.00001; issued and outstanding: 83,623,466 and 83,360,966 shares, respectively.   837    834 
Additional paid-in capital   26,253,904    26,220,157 
Stock subscriptions and stock to be issued   15,552    41,302 
Accumulated other comprehensive loss   (237,207)   (130,660)
Accumulated deficit   (23,575,566)   (23,260,549)
Total stockholders’ equity   2,457,520    2,871,084 
Total liabilities and stockholders’ equity  $8,391,233   $8,662,675 

 

See accompanying condensed notes to these interim consolidated financial statements.

 

 3 
 

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(Expressed in U.S. dollars)

(unaudited)

 

   Three Months Ended
March 31,
 
   2019   2018 
Revenue          
Oil and natural gas sales  $1,024,784   $964,022 
Cost and expenses          
Production   658,453    711,621 
Depletion   151,400    163,049 
Depreciation   12,353    5,348 
Accretion of asset retirement obligation   100,653    84,058 
General and administrative   417,480    420,966 
Total expenses   1,340,339    1,385,042 
Loss before other income (expense)   (315,555)   (421,020)
Other income (expense)          
Interest income   6,447    3,343 
Interest expense   (9,138)   (22,183)
Accretion of operating lease liability   (1,424)   - 
Loss on debt settlement   -    (102,500)
Other expense   (77)   - 
Foreign exchange loss   4,730    (7,803)
Total other income (expense)   538    (129,143)
Net loss for the period  $(315,017)  $(550,163)
           
Loss per share, basic and diluted  $(0.00)  $(0.01)
Weighted average number of shares outstanding   83,489,299    59,467,328 
Other comprehensive income (loss)          
Change in foreign currency translation adjustments  $(106,547)  $249,963 
Comprehensive loss for the period  $(421,564)  $(300,200)

 

See accompanying condensed notes to these interim consolidated financial statements.

 

 4 
 

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

Consolidated Statements of Stockholders’ Equity

(Expressed in U.S. dollars)

(unaudited)

 

   Common stock  

Additional

paid-in

  

Stock

subscriptions

and stock to

  

Accumulated

other

comprehensive

   Accumulated     
   Shares   Amount   capital   be issued   income (loss)   deficit   Total 
                             
Balance, December 31, 2017   58,243,904   $582   $22,905,377   $80,400   $(135,469)  $(20,885,036)  $1,965,854 
Issuance of common stock   16,278,562    163    1,633,960                1,634,123 
Stock subscriptions received               41,302            41,302 
Stock issuance costs           (33,834)               (33,834)
Vesting of restricted stock units   1,190,000    12    137,938    (80,400)           57,550 
Stock-based compensation expense           279,677                279,677 
Warrant modification expense           474,668                474,668 
Issuance of finders warrants           10,584                10,584 
Stock-issued for debt settlement   7,236,000    73    744,292                744,365 
Stock issued as deposit for oil and gas property   500,000    5    67,495                67,500 
Returned to treasury   (87,500)   (1)                   (1)
Currency translation adjustment                   4,809        4,809 
Net loss                       (2,375,513)   (2,375,513)
Balance, December 31, 2018   83,360,966   $834   $26,220,157   $41,302   $(130,660)  $(23,260,549)  $2,871,084 
Issuance of common stock   262,500    3    33,747    (25,750)           8,000 
Currency translation adjustment                   (106,547)       (106,547)
Net loss                       (315,017)   (315,017)
Balance, March 31, 2019   83,623,466   $837   $26,253,904   $15,552   $(237,207)  $(23,575,566)  $2,457,520 

 

See accompanying notes to interim consolidated financial statements

 

 5 
 

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

 

   Three Months Ended
March 31,
 
   2019   2018 
Operating activities:          
Net loss for the period  $(315,017)  $(550,163)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depletion   151,400    163,049 
Depreciation   12,353    5,348 
Accretion of asset retirement obligation   100,653    84,058 
Accretion of operating lease liability   1,424    - 
Loss on debt settlement   -    102,500 
Interest from loans payable   9,138    22,183 
Changes in operating assets and liabilities:          
Receivables   (436,306)   (334,478)
Prepaid expenses and deposits   77,596    39,646 
Accounts payable and accrued liabilities   30,439    287,697 
Net cash used in operating activities   (368,320)   (180,160)
Investing activities:          
Oil and gas properties expenditures   (31,048)   (309,515)
Net cash used in investing activities   (31,048)   (309,515)
Financing activities:          
Proceeds from stock subscriptions received   8,000    675,000 
Share issuance costs   -    (7,250)
Payments of operating lease liability   (5,264)   - 
Proceeds from loans payable   3,000    2,500 
Repayments of loans payable   (3,200)   (92,520)
Net cash provided by financing activities   2,536    577,730 
Effect of exchange rate changes on cash and restricted cash   (85,980)   (15,314)
Change in cash and restricted cash   (482,812)   72,741 
Cash and restricted cash at beginning of period   898,271    258,164 
Cash and restricted cash at end of period  $415,459   $330,905 
           
Reconciliation of cash, cash equivalents and restricted cash:          
Cash and cash equivalents, end of period   317,378    795,520 
Restricted cash, end of period   98,081    102,751 
Cash, cash equivalents and restricted cash, end of period  $415,459   $898,271 
           
Non-cash investing and financing activities:        
Restricted stock issued for oil and gas property expenditures  $-   $67,500 
Issuance of common stock for restricted stock units  $-   $80,400 
Loans payable converted to stock  $-   $250,000 
Asset retirement cost addition  $-   $1,127,344 
Operating lease right-of-use asset addition  $60,390   $- 

 

See accompanying condensed notes to these interim consolidated financial statements.

 

 6 
 

 

TRILLION ENERGY INTERNATIONAL INC.

Formerly known as Park Place Energy, Inc.

Notes to the Condensed Interim Consolidated Financial Statements

(unaudited)

 

1. Organization

 

Trillion Energy International Inc. and its consolidated subsidiaries, (“Trillion Energy”, the “Company” and formerly known as Park Place Energy, Inc.) is a U.S. based oil and natural gas exploration and production company. Our corporate headquarters are located at Suite 700, 838 West Hastings Street, Vancouver, B.C., Canada. The Company also has registered offices in Turkey and Bulgaria. The Company was incorporated in Delaware in 2015.

 

On January 11, 2019, the Company filed a preliminary non-offering prospectus with the British Columbia Securities Commission (“BCSC”). The prospectus is being filed in accordance with the provisions of Canadian National Instrument 41-101 – General Prospectus Requirements to qualify the distribution of the Company’s common shares in Canada. No new securities are being registered for offer. Concurrently with the filing, the Corporation is making an application to list the Corporation’s common shares on the Canadian Securities Exchange. The listing is subject to a number of conditions, including the filing of, and acceptance by, a final non-offering prospectus with the BCSC, and acceptance and approval by the Canadian Securities Exchange.

 

Effective April 1, 2019, the Company changed its name from Park Place Energy Inc. (OTC: PKPL) to Trillion Energy International Inc. (OTC: TCFF). The Company’s new CUSIP is 89621V103.

 

2. Summary of Significant Accounting Policies

 

  (a) Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019.

 

The consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in Trillion Energy’s annual report on Form 10-K for the year ended December 31, 2018.

 

The Company has suffered recurring losses from operations and the Company has a significant working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

 

 7 
 

 

  (b) Use of Estimates

 

The preparation of consolidated financial statements 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 the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

  (c) Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

  (d) Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The Company adopted this standard on a modified retroactive basis on January 1, 2018. No financial statement impact occurred upon adoption.

 

Revenue from Contracts with Customers

 

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products.

 

Performance Obligations and Significant Judgments

 

The Company sells oil and natural gas products in Turkey. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product.

 

The oil and natural gas are typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil is transferred. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under the Company’s natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For the Company’s other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, the Company has determined that the Company is the principal in the arrangement and the processors are the Company’s customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor.

 

Transfer of control drives the presentation of transportation and gathering costs within the accompanying unaudited consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying unaudited consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue.

 

 8 
 

 

A portion of the Company’s product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

 

For the Company’s product sales that have a contract term greater than one year, the Company uses the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period.

 

The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained.

 

  (e) Accounts Receivable

 

Accounts receivable consist of oil and natural gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company deems all accounts receivable to be collectable and has not recorded any allowance for doubtful accounts.

 

  (f) Long-Lived Assets

 

In accordance with ASC 360 “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances that could trigger a review include, but are not limited to: significant decreases in the market price of the assets; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; and current expectation that the assets will more likely than not be sold or disposed significantly before the end of their estimated useful life. Recoverability is assessed based on the carrying amount of the assets and their fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the assets, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount of the assets is not recoverable and exceeds fair value.

 

  (g) Oil & Natural Gas Properties

 

The Company follows the full cost method of accounting for oil and natural gas operations, whereby all costs of exploring for and developing oil and natural gas reserves are capitalized and accumulated in cost centers on a country-by-country basis. Costs include: license and land acquisition costs, geological, engineering, geophysical, seismic, and other data, carrying charges on non-productive properties and costs of drilling and completing both productive and non-productive wells. General and administrative costs which are associated with acquisition, exploration and development activities are capitalized. General and administrative costs are capitalized other than to the extent of the Company’s working interest in operated capital expenditure programs on which operator’s fees have been charged equivalent to standard industry operating agreements.

 

 9 
 

 

The costs in each cost center, including the costs of well equipment, are depleted and depreciated using the unit-of-production method based on the estimated proved reserves before royalties. The costs of acquiring and evaluating significant unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.

 

The capitalized costs (less accumulated depletion and depreciation in each cost center) are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet date) plus the cost (net of impairments) of unproved properties. The total capitalized costs, less accumulated depletion and depreciation, site restoration provision and future income taxes of all cost centers, is further limited to an amount equal to the future net revenue from proved reserves plus the cost (net of impairments) of unproved properties of all cost centers less estimated future site restoration costs, general and administrative expenses, financing costs and income taxes.

 

Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly decrease the Company’s total proven reserves.

 

  (h) Property and Equipment

 

Property and equipment are stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives are: other equipment are depreciated over 20 years; and operating lease right-of-use assets and leasehold improvements are depreciated over the term of the lease.

 

  (i) Asset Retirement Obligations

 

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that results from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company also records a corresponding asset that is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

 

  (j) Financial Instruments and Fair Value Measurement

 

The carrying amounts reported in the consolidated balance sheets for cash equivalents, account receivables, notes receivable, accounts payable and accrued liabilities and loans payable approximate fair value because of the immediate or short-term maturity of these financial instruments. None of these instruments are held for trading purposes.

 

  (k) Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

As of December 31, 2018, and 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. The Company did not incur any penalties or interest during the years ended December 31, 2018 and 2017. On December 22, 2017 the U.S. enacted the Tax Cuts and Jobs Act (“the Tax Act”) which significantly changed U.S. tax law. The Tax Act lowered the Company’s statutory federal income tax rate from a maximum of 39% to a rate of 21% effective January 1, 2018. The company has deferred tax losses and assets and they were adjusted as a result of the change in tax law reducing the federal income tax rate. The Company’s tax years 2014 and forward remain open.

 

 10 
 

 

  (l) Foreign Currency Translation

 

Operations outside the United States prepare financial statements in currencies other than the United States dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity and other comprehensive income. The functional currency of the Company’s Bulgarian operations is considered to be the Bulgarian Lev. The functional currency of the Company’s Turkish operations is considered to be the Turkish lira.

 

  (m) Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718 (“Compensation – Stock Compensation”) using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

 

  (n) Loss per Share

 

The Company computes loss per share of Company stock in accordance with ASC 260 “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2019 and 2018, the Company had 22,154,782 and 11,990,000 potentially dilutive shares outstanding, which were excluded from the calculation of diluted EPS, respectively.

 

  (o) Comprehensive Loss

 

Comprehensive loss consists of net loss and foreign currency cumulative translation adjustment.

 

New Accounting Pronouncements

 

Adopted in the Current Year

 

  (p) Leases

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.

 

 11 
 

 

The Company adopted the new standard effective January 1, 2019 and elected the modified retrospective for the transition. The Company elected the following practical expedients:

 

  ●  Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
     
  Package of practical expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Company to continue classifying its leases at transition in substantially the same manner.
     
  Single component practical expedient – permits the Company to not separate lease and non-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the condensed consolidated statement of operations.
     
  Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. Upon transition the Company recognized lease assets and lease liabilities principally for its office lease. When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 10%. Refer to Notes 6 and 9.

 

3. Deposits

 

Included in prepaid expenses and deposits for the three months ended March 31, 2019, is approximately $161,311 relating to field insurance for the Turkey Operations.

 

Included in prepaid expenses and deposits for the year ended December 31, 2018, is approximately $237,791 relating to field insurance for the Turkey Operations.

 

4. Restricted Cash

 

The restricted cash relates to drilling bonds provided to GDPA (General Directorate of Petroleum Affairs) for the exploration licenses due to Turkish Petroleum Law. The amounts are for 2% of the annual work budget of the different Turkish licenses which is submitted to GDPA on an annual basis.

 

5. Oil and Natural Gas Properties

 

   Unproven properties   Proven properties     
   Bulgaria   Turkey   Total 
January 1, 2018  $3,083,831   $2,639,563   $5,723,394 
Foreign currency translation change   (3,697)   -    (3,697)
Expenditures   37,095    467,015    504,110 
Depletion   -    (700,219)   (700,219)
Asset retirement cost addition   -    1,127,344    1,127,344 
December 31, 2018  $3,117,229   $3,533,703   $6,650,932 
Foreign currency translation change   (1,311)   -    (1,311)
Expenditures   -    31,048    31,048 
Depletion   -    (151,400)   (151,400)
March 31, 2019  $3,115,918   $3,413,351   $6,529,269 

 

 12 
 

 

Bulgaria

 

The Company holds a 98,205-acre oil and natural gas exploration claim in the Dobrudja Basin located in northeast Bulgaria. The Company intends to conduct exploration for natural gas and test production activities over a five-year period in accordance with or exceeding its minimum work program obligation. The Company’s commitment is to perform geological and geophysical exploration activities in the first 3 years of the initial term (the “Exploration and Geophysical Work Stage”), followed by drilling activities in years 4 and 5 of the initial term (the “Data Evaluation and Drilling Stage”). The Company is required to drill 10,000 meters (approximately 32,800 feet) of new wellbore (which may be vertical, horizontal, or diagonal) and conduct other exploration activities during the initial term. The Company intends to commence its work program efforts once it receives all regular regulatory approvals of its work programs.

 

Turkey

 

Cendere oil field

 

The primary asset of the Trillion Energy Turkey Companies is the Cendere onshore oil field, which is a profitable oil field located in South East Turkey having a total of 25 wells. The Cendere Field was first discovered in 1988. Oil production commenced during 1990. The operator of the Cendere Field is TPAO. The Company’s interest is 19.6% for all wells except for wells C-13, C-15 and C-16, for which its interest is 9.8%. The produced oil has a gravity of 27.5o API.

 

The Cendere Field is a long term low decline oil reserve. The Company has a 19.6% interest in the Cendere oil field located in Southeast Turkey. This mature oilfield consistently produces 150 bopd (barrels oil per day) net to the Company. During April 2019, the Company’s average net oil was 128.17 bopd at 96% water cut.

 

At December 31, 2018, the Cendere field was producing 170 barrels of oil equivalent per day, net to the Trillion Energy Turkey Companies; and averaged 150 barrels of oil equivalent per day during 2018 net to the Trillion Energy Turkey Companies. After the initial development of the Cendere Field, oil production was approximately 2,000 bopd from three wells and which peaked at approximately 7,000 bopd in 1992, when additional wells were put into production. The field started to produce water during the first year of production. As of May 1, 2019, 20.3MMbbls of oil have been produced from the Cendere Field.

 

A description of the Cendere Field geological and reservoir characteristics is as follows. The reservoirs are located in the South East Anatolian Basin and within the Middle Cretaceous period. The carbonated Derdere Formation is the main reservoir in Cendere Field and has dolomitization and fracturing, which enhance its production characteristics. There are also four additional oil reservoirs contained within Cendere Field. The Cendere Field is covered by 54 km2 of 3D seismic that was acquired in 2004.

 

The field was developed using a collection of dispersed oil wells from which production is collected and exported to the Cendere gathering station. The produced oil is exported to the TPAO Karakus processing facility which then is transported onwards to the BOTAS-operated oil pipeline. There are 20 well pads which currently house 16 producing wells spread over an area of approximately 15 square kilometers. A field gathering station, located to the southwest of the Cendere Field collects the oil and produced water from a collection of flowlines and manifolds.

 

 13 
 

 

The South Akcakoca Sub-Basin (“SASB”)

 

The Company owns offshore production licenses called the South Akcakoca Sub-Basin (“SASB”). The Company now owns a 49% working interest in SASB, 12.25% which was obtained during January 2018. The additional interest was acquired with cash of $309,515, 1,000,000 shares issued on November 22, 2017 fair valued at $90,000 and a further share issuance of 500,000 shares on January 30, 2018 fair valued at $67,500 for total consideration of $467,015. SASB has four producing fields, each with a production platform plus subsea pipelines that connect the fields to an onshore gas plant. The four SASB fields are located off the north coast of Turkey towards the western end of the Black Sea in water depths ranging from 60 to100 meters. Gas is produced from Eocene age sandstone reservoirs at subsea depths ranging from 1,100 to1,800 meters.

 

Bakuk gas field

 

The Company also owns a 50% operated interest in the Bakuk gas field located near the Syrian border. The Bakuk field is shut-in with no plans to revive production in the near term.

 

6. Property and Equipment

 

   Operating lease asset   Leasehold improvements   Other equipment   Total 
January 1, 2018  $-   $82,069   $15,708   $97,777 
Foreign currency translation change   -    (17,793)   (13,155)   (30,948)
Expenditures   -    897    84,827    85,724 
Disposals   -    -    (16,990)   (16,990)
Depreciation   -    (20,697)   (8,711)   (29,408)
December 31, 2018  $-   $44,476   $61,679   $106,155 
Additions   60,390    -    -    60,390 
Foreign currency translation change   (3,812)   (2,896)   (4,138)   (10,846)
Depreciation   (4,508)   (3,442)   (4,403)   (12,353)
March 31, 2019  $52,071   $38,138   $53,138   $143,346 

 

7. Note Receivable

 

In April 2015, the Company loaned $38,570 to a Bulgarian company pursuant to a revolving credit facility, enabling such Bulgarian company to buy and manage land in Bulgaria to be leased by the Company for future well sites. The credit facility has a maximum loan obligation of BGN 1,000,000 ($585,114 USD at March 31, 2019) bears interest at 6.32%, has a five-year term and is secured by the land the Bulgarian company buys. Payment on the facility is due the earlier of the end of the five-year term (April 6, 2020) or demand by the Company. As of March 31, 2019, the outstanding balance on the loan obligation was $48,217 (December 31, 2018: $49,192). The change in balance was due to changes in foreign currency translations.

 

8. Loans Payable

 

As at  March 31, 2019   December 31, 2018 
Interest bearing loans  $374,051   $368,113 
Non-interest-bearing loans   14,955    11,955 
Total  $389,006   $380,068 

 

Loans bearing interest, accrue at 10% per annum are all unsecured. All loans are due on demand. No interest has been inputted on the non-interest-bearing loans as it would be immaterial to the financial statements.

 

 14 
 

 

9. Leases

 

The Company leases certain assets under lease agreements. The lease liability consists of a single lease for office space which was classified as an operating lease. Upon adoption of Topic 842, on January 1, 2019 the Company recognized an addition to right-of-use assets of $60,309 and lease liabilities of $59,076. The difference between the recorded right-of-use assets and lease liabilities is mainly due to the reclassification of prepaid leasehold improvements incurred in lieu of twelve months rent which was included within the right-of-use asset recognized upon transition. As of March 31, 2019, the lease had remaining terms of 3 years and a weighted average remaining lease term of 3 years. Operating right-of-use assets and lease liabilities have been included within property and equipment and lease liabilities on the Company’s condensed consolidated balance sheet as follows:

 

Right-of-use asset  March 31, 2019 
Lease asset  $52,071 
Leasehold improvements   38,138 
Total right-of-use asset  $90,209 

 

Lease liability  March 31, 2019 
Current portion  $15,465 
Long-term portion   35,958 
Total lease liability  $51,423 

 

Operating lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 10% in determining its lease liabilities. The discount rate was derived from the Company’s assessment of current borrowings.

 

Operating lease right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

 

Accretion on operating lease liabilities for the three months ended March 31, 2019 was $1,424. Principal payments against the operating lease liabilities for the three months ended March 31, 2019 was $5,264.

 

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of March 31, 2019 for the next five years and thereafter are as follows:

 

2019  $14,933 
2020   19,911 
2021   19,911 
2022   4,978 
2023   - 
Thereafter   - 
Total future minimum lease payments  $59,733 
Discount   (8,310)
Total  $51,423 

 

 15 
 

 

10. Asset Retirement Obligations

 

Asset retirement obligations (“AROs”) associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. Our ARO is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs.

 

The Company estimated an ARO for the addition of 12.25% of the South Akcakoca Sub Basin as disclosed in Note 2. For the current period addition, the Company used 2.5% as inflation rate and used a risk-free rate of 10% to present value the obligation.

 

The following is a description of the Company’s asset retirement obligations:

 

   March 31, 2019   December 31, 2018 
         
Asset retirement obligations at beginning of period  $4,026,129   $2,527,259 
Additions   -    1,127,344 
Accretion expense   100,653    371,526 
Asset retirement obligations at end of period  $4,126,782   $4,026,129 

 

11. Common Stock

 

For the three months ended March 31, 2019

 

  (a) On February 15, 2019, the Company issued 112,500 at $0.10 per share for gross proceeds of $11,250, pursuant to a private placement closed on November 12, 2018, and included in stock subscriptions and to be issued as of December 31, 2018. Each common share having ½ of one share purchase warrant attached, resulting in the issuance of 56,250 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.
     
  (b) On February 15, 2019, the Company issued 150,000 common shares at $0.15 per share for gross proceeds of $22,500, pursuant to a private placement closed on November 12, 2018, and included in stock subscriptions and to be issued as of December 31, 2018. Each common share having one share purchase warrant attached, resulting in the issuance of 150,000 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.

 

For the three months ended March 31, 2018

 

  (a) During the period, the Company closed several private placements with the issuance of 6,550,000 shares of common stock, at $0.10 per share for gross proceeds of $655,000. Each common share having ½ of one share purchase warrant attached, resulting in the issuance of 3,275,000 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.
     
  (b) The Company received a further $20,000 in subscriptions, which were closed subsequent to period end and issued 670,000 shares to management and a consultant valued at $80,400, which were outstanding at December 31, 2017.
     
  (c) On a private placement, a broker fee of $7,250 was paid and offset against paid up capital.

 

 16 
 

 

  (d) On January 30, 2018, the Company issued 500,000 shares of the company’s common stock as partial consideration of an additional 12.25% of the South Akcakoca Sub Basin (“SASB”) gas field. The common shares were fair valued at $67,500 based on the closing price of the stock on the date of issuance.
     
  (e) On March 5, 2018 the Company settled note payables of $250,000 for 2,500,000. The market price of the stock on the date of settlement was $0.141 and loss of $102,500 was recorded.

 

12. Stock Options

 

The Board of Directors adopted the Park Place Energy Corp. 2013 Long-Term Incentive Equity Plan (the “Incentive Plan” or “2013 Plan”) effective as of October 29, 2013. The Incentive Plan permits grants of stock options (including incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock awards, and other stock-based awards.

 

The Incentive Plan authorizes the following types of awards:

 

  incentive stock options and nonqualified stock options to purchase Common Stock at a set price per share;
  stock appreciation rights (“SARs”) to receive upon exercise Common Stock or cash equal to the appreciation in value of a share of Common Stock;
  restricted stock, which are shares of Common Stock granted subject to a restriction period and/or a condition which, if not satisfied, may result in the complete or partial forfeiture of the shares;
  other stock-based awards, which provide for awards denominated in or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock of the Company, which may include performance shares or options and restricted stock units which provide for shares to be issued or cash to be paid upon the lapse of predetermined restrictions.

 

Under the 2013 Plan, the maximum number of shares of authorized stock that may be delivered is 10% of the total number of shares of common stock issued and outstanding of the Company as determined on the applicable date of grant of an award under the 2013 Plan. Under the 2013 Plan, the exercise price of each option (or other stock-based award) shall not be less than the market price of the Company’s stock as calculated immediately preceding the day of the grant. The vesting schedule for each option or other stock-based award shall be specified by the Board of Directors at the time of grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.

 

A continuity of the Company’s outstanding stock options for the three months ended March 31, 2019 is presented below:

 

   Number of
options
   Weighted average
exercise price
 
Outstanding, December 31, 2018   4,565,000   $0.13 
Expired   (115,000)   0.10 
Outstanding, March 31, 2019   4,450,000   $0.13 

 

At March 31, 2019, the Company had the following outstanding stock options:

 

Number   Exercise Price   Expiry Date  Number Vested 
 100,000   $0.19   March 14, 2020   100,000 
 900,000   $0.18   March 26, 2021   900,000 
 1,000,000   $0.12   September 15, 2022   1,000,000 
 2,450,000   $0.12   October 24, 2023   2,450,000 
 4,450,000            4,450,000 

 

 17 
 

 

As of March 31, 2019, all stock options have fully vested. The weighted average remaining contractual life of outstanding stock options is 3.72 years (December 31, 2018: 3.87). The aggregate intrinsic value of the stock options at March 31, 2019 is $131,100 (December 31, 2018: $Nil).

 

There was no compensation expense related to stock options recognized during the three months ended March 31, 2019 and 2018. At March 31, 2019, the Company has no unrecognized compensation expense related to stock options.

 

13. Warrants

 

A continuity of the Company’s outstanding share purchase warrants for the three months ended March 31, 2019 is presented below:

 

   Number of
warrants
   Weighted average
exercise price
 
Outstanding, December 31, 2018   17,498,532   $0.25 
Issued   206,250    0.30 
Outstanding, March 31, 2019   17,704,782   $0.25 

 

At March 31, 2019, the Company had the following outstanding share purchase warrants:

 

Number   Exercise Price       Expiry Date
1,650,000   $ 0.30       January 30, 2020
700,000     0.30       February 9, 2020
500,000     0.30       February 21, 2020
1,675,000     0.30       March 7, 2020
50,000     0.30       April 8, 2020
50,000     0.30       May 20, 2020
1,000,000     0.30       July 1, 2020
350,000     0.30       August 19, 2020
160,531     0.30       August 20, 2020
4,538,000     0.30       October 26, 2020
1,125,000     0.30       November 7, 2020
200,001     0.30       November 23, 2020
5,500,000     0.15       November 30, 2020
206,250     0.30       February 15, 2021
17,704,782              

 

The weighted average remaining contractual life of outstanding warrants is 1.41 years (December 31, 2018: 1.65).

 

14. Related Party Transactions

 

At March 31, 2019, $104,945 of accounts payable were to related parties as compared to $67,345 at December 31, 2018 for outstanding management and consulting fees. The amounts owed, and owing are unsecured, non-interest bearing, and due on demand.

 

During the three months ended March 31, 2019, included in general and administrative expenses is $37,500 (2018: $50,000) in respect of directors and management fees.

 

15. Segment Information

 

During 2019 and 2018, the Company’s operations were in the resource industry in Bulgaria, and Turkey with head offices in the United States and a satellite office in Sofia, Bulgaria. The Company operated a few segments, a head office in Canada, an oil and natural gas operations in Turkey and its oil and natural gas properties are located in Bulgaria.

 

 18 
 

 

For the period ended March 31, 2019

 

   Bulgaria   North America   Turkey   Total 
Revenue                    
Oil and gas sales  $-   $-   $1,024,784   $1,024,784 
                     
Cost and expenses                    
Production   -    -    658,453    684,453 
Depletion   -    -    151,400    151,400 
Depreciation   -    -    12,353    12,353 
Accretion of asset retirement obligation   -    -    100,653    100,653 
General and administrative   459    160,243    256,778    417,480 
Total (recovery) expenses  $459   $160,243   $1,179,637   $1,340,339 
                     
Income (loss) before other income (expenses)  $(459)  $(160,243)  $(154,853)  $(315,555)
Other income (expenses)                    
Interest income   -    -    6,447    6,447 
Interest expense   -    (9,138)   -    (9,138)
Accretion of operating lease liability   -    -    (1,424)   (1,424)
Foreign exchange gain (loss)   -    2,067    2,663    4,730 
Other expense   -    -    (77)   (77)
Total other income (expense)  $-   $(7,071)  $7,609   $538 
                     
Net Income (loss)  $(459)  $(167,314)  $(147,244)  $(315,017)
                     
Long Lived Assets  $3,115,918   $-   $3,525,649   $6,641,567 

 

For the period ended March 31, 2018

 

   Bulgaria   North America   Turkey   Total 
Revenue                    
Oil and gas sales  $-   $-   $964,022   $964,022 
                     
Cost and expenses                    
Production   -    -    711,621    711,621 
Depletion   -    -    163,049    163,049 
Depreciation   -    -    5,348    5,348 
Accretion of asset retirement obligation   -    -    84,058    84,058 
General and administrative   (150)   178,344    242,772    420,966 
Total (recovery) expenses  $(150)  $178,344   $1,206,848   $1,385,042 
                     
Income (loss) before other income (expenses)  $150   $(178,344)  $(242,826)  $(421,020)
Other income (expenses)                    
Interest income   -    -    3,343    3,343 
Interest expense   -    (22,183)   -    (22,183)
Foreign exchange gain (loss)   -    2,455    (10,258)   (7,803)
Loss on debt settlement   -    (102,500)   -    (102,500)
Total other income (expense)  $-   $(122,228)  $(6,915)  $(129,143)
                     
Net Income (loss)  $150   $(300,572)  $(249,741)  $(550,163)
                     
Long Lived Assets  $-   $-   $4,163,304   $4,163,304 

 

16. Income Taxes

 

The Company is subject to United States federal and state income taxes at a rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

  

Three Months Ended

March 31,

 
   2019   2018 
Benefit at statutory rate  $(66,154)  $(115,534)
Permanent differences and other:   -    - 
Valuation allowance change   66,154    115,534 
Income tax provision  $   $ 

 

 19 
 

 

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

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide readers of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

 

  Executive Summary
     
  Results of Operations
     
  Liquidity and Capital Resources
     
  Forward-Looking Information

 

Our MD&A should be read in conjunction with our unaudited financial statements of Trillion Energy International Inc. (“Trillion Energy”, Company”, “we”, and “our” and formerly known as Park Place Energy, Inc.) and related Notes in Part I, Item 1 of the Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of the Annual Report on Form 10-K for the year ended December 31, 2018.

 

Our website can be found at www.trillionenergy.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”), can be accessed free of charge by linking directly from our website under the “Investor Relations - SEC Filings” caption to the SEC’s Edgar Database.

 

Executive Summary

 

Trillion Energy is a U.S. based oil and gas exploration and production company focused on expanding its portfolio of projects in Southeast Europe, Turkey, and countries in the immediate vicinity. The Company’s concentration is on recently acquired oil and gas producing assets in Turkey and a coal bed methane exploration license in Bulgaria.

 

On January 11, 2019, the Company filed a preliminary non-offering prospectus with the British Columbia Securities Commission (“BCSC”). The prospectus is being filed in accordance with the provisions of Canadian National Instrument 41-101 – General Prospectus Requirements to qualify the distribution of the Company’s common shares in Canada. No new securities are being registered for offer. Concurrently with the filing, the Corporation is making an application to list the Corporation’s common shares on the Canadian Securities Exchange. The listing is subject to a number of conditions, including the filing of, and acceptance by, a final non-offering prospectus with the BCSC, and acceptance and approval by the Canadian Securities Exchange.

 

Effective April 1, 2019, the Company changed its name from Park Place Energy Inc. (OTC: PKPL) to Trillion Energy International Inc. (OTC: TCFF). The Company’s new CUSIP is 89621V103.

 

Turkey

 

On January 18, 2017, the Company completed the acquisition of three oil and natural gas producing fields in Turkey. The purchase price for the acquisition of the Trillion Energy Turkey Companies from Tiway Oil B.V. was $2.1 million. At March 31, 2019 net production from these fields was around 199.52 boepd (barrel of oil equivalent per day).

 

The primary asset of the Trillion Energy Turkey Companies is the Cendere onshore oil field, which is a profitable oil field located in South East Turkey having a total of 25 wells. The Cendere Field was first discovered in 1988. Oil production commenced during 1990. The operator of the Cendere Field is TPAO. The Company’s interest is 19.6% for all wells except for wells C-13, C-15 and C-16, for which its interest is 9.8%. The produced oil has a gravity of 27.5o API. After the initial development of the Cendere Field, oil production was approximately 2,000 bopd from three wells and which peaked at approximately 7,000 bopd in 1992, when additional wells were put into production. The field started to produce water during the first year of production. As of May 1, 2019, 20.3MMbbls of oil have been produced from the Cendere Field. During April 2019, the Company’s average net oil was 128.17 bopd at 96% water cut.

 

A description of the Cendere Field geological and reservoir characteristics is as follows. The reservoirs are located in the South East Anatolian Basin and within the Middle Cretaceous period. The carbonated Derdere Formation is the main reservoir in Cendere Field and has dolomitization and fracturing which enhance its production characteristics. There are also four additional oil reservoirs contained within Cendere Field.

 

The Cendere Field is covered by 54 km2 of 3D seismic that was acquired in 2004.

 

The field was developed using a collection of dispersed oil wells from which production is collected and exported to the Cendere gathering station. The produced oil is exported to the TPAO Karakus processing facility which then is transported onwards to the BOTAS-operated oil pipeline.

 

There are 20 well pads which currently house 16 producing wells spread over an area of approximately 15 square kilometers. A field gathering station, located to the southwest of the Cendere Field collects the oil and produced water from a collection of flowlines and manifolds.

 

 20 
 

 

The Cendere Field is a long term low decline oil reserve. The Company has a 19.6% interest in the Cendere oil field located in Southeast Turkey. This mature oilfield consistently produces between 110 and 123 bopd (barrels oil per day) net to the Company.

 

At March 31, 2019, the gross oil production rate for the producing wells in Cendre was 142 bbls/day; the average daily 2018 gross production rate for the field was 770 bbls/day. As of May 2019, oil is currently sold at a price of approximately US$67 per barrel for a netback per barrel of approximately US$32. At year-end 2018, the Cendere field was producing 170 barrels of oil per day, net to the Trillion Energy Turkey Companies; and averaged 150 barrels per day during 2018 net to the Trillion Energy Turkey Companies.

 

The main producing asset was a 36.75% interest in an offshore gas development project called the South Akçakoca Sub-Basin (SASB). The Company further acquired from its partner Foinavon Energy Turkey Inc. 12.25% working interest in the same license for 1,500,000 shares of the Company and $275,000 on February 8, 2018 to have a total of 49%. This field has four offshore platforms connected to an onshore gas plant. On March 31, 2019, net gas production to the Company was around 427 Mcfd (thousand cubic feet per day) from six producing wells. The SASB field potentially holds significant upside.

 

At SASB, the Company plans to reprocess the 3D seismic to facilitate a potential future program of drilling to bring discovered undeveloped gas pools on to production.

 

Bulgaria

 

The Company entered into an exploration license over a 98,000 acre block in northeast Bulgaria in 2014. The overall five year and our first year work programs were approved by the Ministry of Environment (“MEW”), however, the MEW approval was appealed in an administrative proceeding. The administrative court remanded the matter to MEW in May 2017 for a determination by the MEW as to whether an ecological evaluation of the license area should be required. This matter was determined in 2017 and we are in the progress of obtaining an environmental report which will cost an estimated $100,000. Upon the license becoming effective our exploration program will commence in 2019 for a term of five (5) years.

 

We are required to post a bond (105,000 Euros) upon the 5 year license term commencement. The license period may be extended for up to 5 additional years and may then be converted into an exploitation concession, which can last for up to 35 years. The Company’s initial 5 year commitment involves geological and geophysical exploration activities for the first 3 years followed by drilling at least 10,000 meters (approximately 32,800 feet) of new wellbore in years 4 and 5.

 

Strategic Focus

 

Oil and natural gas prices in Turkey and throughout Southeast Europe make this region highly attractive for oil and gas exploration and production. Most of the countries, including Turkey and Bulgaria, import nearly all of their oil and natural gas and consumption is projected to increase. Turkey also contains many opportunities for additional oil and coal bed methane production as well as enhanced oil and natural gas recovery from existing fields. The Company will evaluate these opportunities as they appear. The fiscal terms are highly attractive. In Turkey, there is a 20% corporate tax and a 12.5% royalty. In Bulgaria, the corporate tax rate is 10% and the royalties are on a sliding rate starting at 3.5% up to 13.5%.

 

The license area holds great attraction as a potential coal bed methane exploration project. The license area was extensively drilled for coal exploration from 1964 to 1990. It was determined that coal mining was not technically feasible. However, the coal exploration drilling provided us with an extensive database.

 

Results of Operations

 

The following summary of our results of operations should be read in conjunction with our unaudited consolidated financial statements for the periods ended March 31, 2019 and 2018 which are included herein.

 

 21 
 

 

Revenue

 

Revenue increased from $964,022 to $1,024,784, growth of 6.3%, for the three months ended March 31, 2019. Revenue increased due to additional production relating to the acquisition of an additional 12.25% working interest in a producing gas property and increased oil prices per barrel.

 

Expenses

 

Our general and administrative expenses for the three months ended March 31, 2019 were $417,480 compared to $420,966 for the three months ended March 31, 2018. $160,702 in expenses were from the North American head office compared to $178,344 in the three months ended March 31, 2018, which resulted in a year over year decrease of $17,492. The decrease is mostly attributable to a decrease in general & administrative expenses in the North American operations; $56,150 was for consulting and management fees (2018 - $131,643) and $35,455 in audit and financial services (2018 - $22,142) and partially offset by increased legal and professional fees of $53,774 (2018 - $8,535). The decrease in general and administrative expenses was also partially offset by Turkey general and administrative expenses which accounted for $256,778 of the total general and administrative for 2019 compared to $242,722 for the three months ended March 31, 2018 resulting in a year over year increase of $14,056.

 

The Company incurred production expenses related to its Tiway operations of $658,453, depletion charges of $151,400, depreciation expense of $12,353 and accretion expense of $100,653 for the three months ended March 31, 2019 compared to production expenses of $711,621, depletion charges of $163,049, depreciation expense of $5,348 and accretion expense of $84,058 for the three months ended March 31, 2018. Production and depletion expenses decreased by $64,817 for the period due to a strengthening of the US dollar compared to the Turkish Lira. This was partially offset by an increase to accretion of asset retirement costs of $16,595 due to the increase in the cost base to the asset retirement obligation from the Foinovan interest acquisition and an increase to depreciation of $7,005 due to the transition to Topic 842 for lease assets and liabilities.

 

Other Income (Expense)

 

For the three months ended March 31, 2019, the Company recorded other income (expense) of $538 compared to other income (expense) of ($129,143) for the same period in 2018. This overall decrease in other (expense) was due to a $102,500 loss on debt settlement recorded in 2018.

 

Loss

 

Our net loss for the three months ended March 31, 2019 was $315,017 compared to $550,163 for the three months ended March 31, 2018. The decrease in overall net losses was a result of the factors as described above.

 

Liquidity and Capital Resources

 

The following table summarizes our liquidity position:

 

   March 31, 2019   December 31, 2018 
   (Unaudited)     
Cash  $317,378   $795,520 
Working capital deficiency   (198,653)   (11,817)
Total assets   8,391,233    8,662,675 
Total liabilities   5,933,713    5,791,591 
Stockholders’ equity   2,457,520    2,871,084 

 

Cash Used in Operating Activities

 

We used cash of $368,320 from operating activities for the three months ended March 31, 2019 compared to $180,160 for the three months ended March 31, 2019. The loss of $315,017 was offset by $274,968 in non-cash expenses for the three months ended March 31, 2019. An increase of $436,306 in receivables from the additional output associated with the increase in working interest and the increased revenue pushed operating outflows to $328,271. Accounts payable and accrued liabilities increased cash inflows by $30,439 which increased solely in the parent company’s operations.

 

 22 
 

 

Cash Flow from Investing Activities

 

Net cash used in investing activities for the three months ended March 31, 2019 was $31,048 compared to $309,515 in the comparative period due to the Company adding a further interest to the SASB field in the first quarter of 2018.

 

Cash Provided by Financing Activities

 

We have funded our business to date primarily from sales of our common stock through private placements and loans. During the three months ended March 31, 2019, we received net cash of $8,000 for stock subscriptions and $3,000 in proceeds from notes payable while repaying $3,200 in loans payable and operating lease payments of $5,264. During the three months ended March 31, 2018, we received net cash of $675,000 for stock subscriptions while repaying $92,520 in loans payable

 

Future Operating Requirements

 

Based on our current plan of operations, we estimate that we will require approximately $1.2 million to pursue our plan of operations over the next 12 months. We plan to spend approximately $350,000 on capital expenditures for ongoing redevelopment operations on the Turkish properties primarily for engineering and reports based on reprocessing of data. We also plan to improve our working capital deficit by paying off accounts payable. The operations in Turkey are self-sustaining and will generate net cash flow sufficient to fund in-country general and administrative expenses as well as a portion of our head office overhead. We will require approximately $250,000 for general and administrative expenses.

 

To reduce our current outstanding trade payables and indebtedness will require approximately $1.2 million; however, we may be able to negotiate terms that will require a lesser amount.

 

Our current plan of operations in the period 12 months from now contemplates reprocessing of data. Subject to the outcome of reprocessing, our plan for 12- 24 months is the drilling of up to four (4) new wells at SASB. Depending on the timing of the drilling operations at our current interest (currently 49%), we project we will incur up to an additional $16 million in capital expenditures to enable us to conduct such operations.

 

As of March 31, 2019, the Company had unrestricted cash of $317,378. The Company is attempting to raise additional capital to fund future exploration and operating requirements.

 

Off-Balance Sheet Arrangements

 

On October 1, 2018 the Company entered into an agreement to grant to a consultant of the Company a 2% (two percent) gross overriding royalty on petroleum substances produced from certain of its currently undeveloped exploration properties, namely: Block 1-11 Vranino situated in Dobrich District, Bulgaria and seven contiguous exploration licences in the province of Hakkari Yuksekova Semdiali Derecik, Turkey. The Grant of the royalty agreement was for services involving technical and corporate advisory services.

 

On October 1, 2018 the Company entered into an agreement to grant to the CEO of the Company a 0.5% (one half of one percent) gross overriding royalty on petroleum substances produced from certain of its currently undeveloped exploration properties, namely: Block 1-11 Vranino situated in Dobrich District, Bulgaria and seven contiguous exploration licences in the province of Hakkari Yuksekova Semdiali Derecik, Turkey. The Grant of the royalty agreement was for services involving technical and corporate advisory services.

 

 23 
 

 

Forward-Looking Information

 

Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of applicable U.S. securities legislation. Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as “plans,” “expects,” “estimates,” “budgets,” “intends,” “anticipates,” “believes,” “projects,” “indicates,” “targets,” “objective,” “could,” “should,” “may” or other similar words.

 

By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements, including the factors discussed under Item 1A. Risk Factors in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to, the following: fluctuations in and volatility of the market prices for oil and natural gas products; the ability to produce and transport oil and natural gas; the results of exploration and development drilling and related activities; global economic conditions, particularly in the countries in which we carry on business, especially economic slowdowns; actions by governmental authorities including increases in taxes, legislative and regulatory initiatives related to fracture stimulation activities, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflicts; the negotiation and closing of material contracts; future capital requirements and the availability of financing; estimates and economic assumptions used in connection with our acquisitions; risks associated with drilling, operating and decommissioning wells; actions of third-party co-owners of interests in properties in which we also own an interest; our ability to effectively integrate companies and properties that we acquire; our limited operating history; our history of operating losses; our lack of insurance coverage; and the other factors discussed in other documents that we file with or furnish to the U.S. Securities and Exchange Commission. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors and our course of action would depend upon our assessment of the future, considering all information then available. In that regard, any statements as to: future oil or natural gas production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital expenditure programs; drilling of new wells; demand for oil and natural gas products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves, including the ability to convert probable and possible reserves to proved reserves; dates by which transactions are expected to close; future cash flows, uses of cash flows, collectability of receivables and availability of trade credit; expected operating costs; changes in any of the foregoing and other statements using forward-looking terminology are forward-looking statements, and there can be no assurance that the expectations conveyed by such forward-looking statements will, in fact, be realized.

 

Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.

 

Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable because we are a smaller reporting company.

 

 24 
 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure of Controls and Procedures

 

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2019 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, we concluded that our disclosure controls and procedures were effective.

 

We believe that our consolidated financial statements contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2019 fairly present our financial condition, results of operations and cash flows in all material respects.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently involved in any legal proceedings and we are unaware of any pending proceedings.

 

Item 1A. Risk Factors

 

Not applicable because we are a smaller reporting company. See risk factors described in Item 1A of the Company’s most recent Annual Report on Form 10-K.

 

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

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mining Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

 25 
 

 

Item 6. Exhibits

 

31.1   Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
     
31.2   Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended
     
32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101   The Company’s unaudited Condensed Consolidated Financial Statements and related Notes for the quarter ended March 31, 2019 from this Quarterly Report on Form 10-Q, formatted in XBRL (eXtensible Business Reporting Language).

 

 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.

 

TRILLION ENERGY INTERNATIONAL INC.  
     
By: /s/ “Arthur Halleran”  
  Arthur Halleran  
  President and CEO (Principal Executive Officer)  
  Date: June 25, 2019  

 

By: /s/ “David Thompson”  
  David Thompson  
  Chief Financial Officer (Principal Financial Officer)  
  Date: June 25, 2019  

 

 27 
 

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

Rule 13a-14(a)/15d-14(a) Certification

 

I, Arthur Halleran, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 of Trillion Energy International Inc. (the “registrant”);

 

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 made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the 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: June 25, 2019

 

  /s/ Arthur Halleran
  Arthur Halleran, Chief Executive Officer
  (Principal Executive Officer)

 

   
 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

Rule 13a-14(a)/15d-14(a) Certification

 

I, David Thompson, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 of Trillion Energy International Inc. (the “registrant”);

 

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 made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:

 

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the 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: June 25, 2019

 

  /s/ David Thompson
  David Thompson, Chief Financial Officer
  (Principal Financial Officer)

 

   
 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1 

Section 1350 Certification

 

In connection with the Quarterly Report on Form 10-Q of Trillion Energy International Inc., (the “Company”) for the quarterly period ended March 31, 2019 as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Arthur Halleran, Chief Executive 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 to the best of our knowledge:

 

  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 result of operations of the Company.

 

Date: June 25, 2019 /s/ Arthur Halleran
 

Arthur Halleran, Chief Executive Officer

(Principal Executive Officer)

 

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

 

   
 

 

EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

Section 1350 Certification

 

In connection with the Quarterly Report on Form 10-Q of Trillion Energy International Inc., (the “Company”) for the quarterly period ended March 31, 2019 as filed with the U.S. Securities and Exchange Commission (the “Report”), I, David Thompson, Chief 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 to the best of our knowledge:

 

  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 result of operations of the Company.

 

Date: June 25, 2019 /s/ David Thompson
 

David Thompson, Chief Financial Officer

(Principal Financial Officer)

 

This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

 

   
 

 

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Document and Entity Information - shares
3 Months Ended
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Jun. 17, 2019
Document And Entity Information    
Entity Registrant Name Trillion Energy International Inc.  
Entity Central Index Key 0001648636  
Document Type 10-Q  
Document Period End Date Mar. 31, 2019  
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Consolidated Balance Sheets - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Current assets:    
Cash $ 317,378 $ 795,520
Receivables 1,053,305 661,298
Prepaid expenses and deposits 201,637 296,827
Total current assets 1,572,320 1,753,645
Oil and natural gas properties, net 6,529,269 6,650,932
Property and equipment, net 143,346 106,155
Restricted cash 98,081 102,751
Note receivable 48,217 49,192
Total assets 8,391,233 8,662,675
Current liabilities:    
Accounts payable and accrued liabilities 1,366,502 1,385,394
Loans payable 389,006 380,068
Operating lease liability - current 15,465
Total current liabilities 1,770,973 1,765,462
Asset retirement obligation 4,126,782 4,026,129
Operating lease liability - long term 35,958
Total liabilities 5,933,713 5,791,591
Stockholders' equity:    
Common stock Authorized: 250,000,000 shares, par value $0.00001; issued and outstanding: 83,623,466 and 83,360,966 shares, respectively. 837 834
Additional paid-in capital 26,253,904 26,220,157
Stock subscriptions and stock to be issued 15,552 41,302
Accumulated other comprehensive loss (237,207) (130,660)
Accumulated deficit (23,575,566) (23,260,549)
Total stockholders' equity 2,457,520 2,871,084
Total liabilities and stockholders' equity $ 8,391,233 $ 8,662,675
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.19.2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Mar. 31, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Common stock, shares authorized 250,000,000 250,000,000
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares issued 83,623,466 83,360,966
Common stock, shares outstanding 83,623,466 83,360,966
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.19.2
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Revenue    
Oil and natural gas sales $ 1,024,784 $ 964,022
Cost and expenses    
Production 658,453 711,621
Depletion 151,400 163,049
Depreciation 12,353 5,348
Accretion of asset retirement obligation 100,653 84,058
General and administrative 417,480 420,966
Total expenses 1,340,339 1,385,042
Loss before other income (expense) (315,555) (421,020)
Other income (expense)    
Interest income 6,447 3,343
Interest expense (9,138) (22,183)
Accretion of operating lease liability (1,424)
Loss on debt settlement (102,500)
Other expense (77)
Foreign exchange loss 4,730 (7,803)
Total other income (expense) 538 (129,143)
Net loss for the period $ (315,017) $ (550,163)
Loss per share, basic and diluted $ (0.00) $ (0.01)
Weighted average number of shares outstanding 83,489,299 59,467,328
Other comprehensive income (loss)    
Change in foreign currency translation adjustments $ (106,547) $ 249,963
Comprehensive loss for the period $ (421,564) $ (300,200)
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.19.2
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
Common Stock [Member]
Additional Paid-in Capital [Member]
Stock Subscriptions and Stock to be Issued [Member]
Accumulated Other Comprehensive Income (loss) [Member]
Accumulated Deficit [Member]
Total
Balance at Dec. 31, 2017 $ 582 $ 22,905,377 $ 80,400 $ (135,469) $ (20,885,036) $ 1,965,854
Balance, shares at Dec. 31, 2017 58,243,904          
Issuance of common stock $ 163 1,633,960 1,634,123
Issuance of common stock, shares 16,278,562          
Stock subscriptions received 41,302 41,302
Stock issuance costs (33,834) (33,834)
Vesting of restricted stock units $ 12 137,938 (80,400) 57,550
Vesting of restricted stock units, shares 1,190,000          
Stock-based compensation expense 279,677 279,677
Warrant modification expense 474,668 474,668
Issuance of finders warrants 10,584 10,584
Stock-issued for debt settlement $ 73 744,292 744,365
Stock-issued for debt settlement, shares 7,236,000          
Stock issued as deposit for oil and gas property $ 5 67,495 67,500
Stock issued as deposit for oil and gas property, shares 500,000          
Returned to treasury $ (1) (1)
Returned to treasury, shares (87,500)          
Currency translation adjustment 4,809 4,809
Net loss (2,375,513) (2,375,513)
Balance at Dec. 31, 2018 $ 834 26,220,157 41,302 (130,660) (23,260,549) 2,871,084
Balance, shares at Dec. 31, 2018 83,360,966          
Issuance of common stock $ 3 33,747 (25,750) 8,000
Issuance of common stock, shares 262,500          
Currency translation adjustment (106,547) (106,547)
Net loss (315,017) (315,017)
Balance at Mar. 31, 2019 $ 837 $ 26,253,904 $ 15,552 $ (237,207) $ (23,575,566) $ 2,457,520
Balance, shares at Mar. 31, 2019 83,623,466          
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.19.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Operating activities:      
Net loss for the period $ (315,017) $ (550,163) $ (2,375,513)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depletion 151,400 163,049 700,219
Depreciation 12,353 5,348 29,408
Accretion of asset retirement obligation 100,653 84,058 371,526
Accretion of operating lease liability 1,424  
Loss on debt settlement 102,500  
Interest from loans payable 9,138 22,183  
Changes in operating assets and liabilities:      
Receivables (436,306) (334,478)  
Prepaid expenses and deposits 77,596 39,646  
Accounts payable and accrued liabilities 30,439 287,697  
Net cash used in operating activities (368,320) (180,160)  
Investing activities:      
Oil and gas properties expenditures (31,048) (309,515)  
Net cash used in investing activities (31,048) (309,515)  
Financing activities:      
Proceeds from stock subscriptions received 8,000 675,000  
Share issuance costs (7,250)  
Payments of operating lease liability (5,264)  
Proceeds from loans payable 3,000 2,500  
Repayments of loans payable (3,200) (92,520)  
Net cash provided by financing activities 2,536 577,730  
Effect of exchange rate changes on cash and restricted cash (85,980) (15,314)  
Change in cash and restricted cash (482,812) 72,741  
Cash and restricted cash at beginning of period 898,271 258,164 258,164
Cash and restricted cash at end of period 415,459 330,905 898,271
Reconciliation of cash, cash equivalents and restricted cash:      
Cash and cash equivalents, end of period 317,378 795,520 795,520
Restricted cash, end of period 98,081 102,751 $ 102,751
Cash, cash equivalents and restricted cash, end of period 415,459 898,271  
Non-cash investing and financing activities:      
Restricted stock issued for oil and gas property expenditures 67,500  
Issuance of common stock for restricted stock units 80,400  
Loans payable converted to stock 250,000  
Asset retirement cost addition 1,127,344  
Operating lease right-of-use asset addition $ 60,390  
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.19.2
Organization
3 Months Ended
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization

1. Organization

 

Trillion Energy International Inc. and its consolidated subsidiaries, (“Trillion Energy”, the “Company” and formerly known as Park Place Energy, Inc.) is a U.S. based oil and natural gas exploration and production company. Our corporate headquarters are located at Suite 700, 838 West Hastings Street, Vancouver, B.C., Canada. The Company also has registered offices in Turkey and Bulgaria. The Company was incorporated in Delaware in 2015.

 

On January 11, 2019, the Company filed a preliminary non-offering prospectus with the British Columbia Securities Commission (“BCSC”). The prospectus is being filed in accordance with the provisions of Canadian National Instrument 41-101 – General Prospectus Requirements to qualify the distribution of the Company’s common shares in Canada. No new securities are being registered for offer. Concurrently with the filing, the Corporation is making an application to list the Corporation’s common shares on the Canadian Securities Exchange. The listing is subject to a number of conditions, including the filing of, and acceptance by, a final non-offering prospectus with the BCSC, and acceptance and approval by the Canadian Securities Exchange.

 

Effective April 1, 2019, the Company changed its name from Park Place Energy Inc. (OTC: PKPL) to Trillion Energy International Inc. (OTC: TCFF). The Company’s new CUSIP is 89621V103.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.19.2
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

 

  (a) Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019.

 

The consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in Trillion Energy’s annual report on Form 10-K for the year ended December 31, 2018.

 

The Company has suffered recurring losses from operations and the Company has a significant working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

 

  (b) Use of Estimates

 

The preparation of consolidated financial statements 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 the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

  (c) Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

  (d) Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The Company adopted this standard on a modified retroactive basis on January 1, 2018. No financial statement impact occurred upon adoption.

 

Revenue from Contracts with Customers

 

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products.

 

Performance Obligations and Significant Judgments

 

The Company sells oil and natural gas products in Turkey. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product.

 

The oil and natural gas are typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil is transferred. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under the Company’s natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For the Company’s other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, the Company has determined that the Company is the principal in the arrangement and the processors are the Company’s customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor.

 

Transfer of control drives the presentation of transportation and gathering costs within the accompanying unaudited consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying unaudited consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue.

 

A portion of the Company’s product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

 

For the Company’s product sales that have a contract term greater than one year, the Company uses the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period.

 

The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained.

 

  (e) Accounts Receivable

 

Accounts receivable consist of oil and natural gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company deems all accounts receivable to be collectable and has not recorded any allowance for doubtful accounts.

 

  (f) Long-Lived Assets

 

In accordance with ASC 360 “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances that could trigger a review include, but are not limited to: significant decreases in the market price of the assets; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; and current expectation that the assets will more likely than not be sold or disposed significantly before the end of their estimated useful life. Recoverability is assessed based on the carrying amount of the assets and their fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the assets, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount of the assets is not recoverable and exceeds fair value.

 

  (g) Oil & Natural Gas Properties

 

The Company follows the full cost method of accounting for oil and natural gas operations, whereby all costs of exploring for and developing oil and natural gas reserves are capitalized and accumulated in cost centers on a country-by-country basis. Costs include: license and land acquisition costs, geological, engineering, geophysical, seismic, and other data, carrying charges on non-productive properties and costs of drilling and completing both productive and non-productive wells. General and administrative costs which are associated with acquisition, exploration and development activities are capitalized. General and administrative costs are capitalized other than to the extent of the Company’s working interest in operated capital expenditure programs on which operator’s fees have been charged equivalent to standard industry operating agreements.

 

The costs in each cost center, including the costs of well equipment, are depleted and depreciated using the unit-of-production method based on the estimated proved reserves before royalties. The costs of acquiring and evaluating significant unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.

 

The capitalized costs (less accumulated depletion and depreciation in each cost center) are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet date) plus the cost (net of impairments) of unproved properties. The total capitalized costs, less accumulated depletion and depreciation, site restoration provision and future income taxes of all cost centers, is further limited to an amount equal to the future net revenue from proved reserves plus the cost (net of impairments) of unproved properties of all cost centers less estimated future site restoration costs, general and administrative expenses, financing costs and income taxes.

 

Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly decrease the Company’s total proven reserves.

 

  (h) Property and Equipment

 

Property and equipment are stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives are: other equipment are depreciated over 20 years; and operating lease right-of-use assets and leasehold improvements are depreciated over the term of the lease.

 

  (i) Asset Retirement Obligations

 

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that results from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company also records a corresponding asset that is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

 

  (j) Financial Instruments and Fair Value Measurement

 

The carrying amounts reported in the consolidated balance sheets for cash equivalents, account receivables, notes receivable, accounts payable and accrued liabilities and loans payable approximate fair value because of the immediate or short-term maturity of these financial instruments. None of these instruments are held for trading purposes.

 

  (k) Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

As of December 31, 2018, and 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. The Company did not incur any penalties or interest during the years ended December 31, 2018 and 2017. On December 22, 2017 the U.S. enacted the Tax Cuts and Jobs Act (“the Tax Act”) which significantly changed U.S. tax law. The Tax Act lowered the Company’s statutory federal income tax rate from a maximum of 39% to a rate of 21% effective January 1, 2018. The company has deferred tax losses and assets and they were adjusted as a result of the change in tax law reducing the federal income tax rate. The Company’s tax years 2014 and forward remain open.

 

  (l) Foreign Currency Translation

 

Operations outside the United States prepare financial statements in currencies other than the United States dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity and other comprehensive income. The functional currency of the Company’s Bulgarian operations is considered to be the Bulgarian Lev. The functional currency of the Company’s Turkish operations is considered to be the Turkish lira.

 

  (m) Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718 (“Compensation – Stock Compensation”) using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

 

  (n) Loss per Share

 

The Company computes loss per share of Company stock in accordance with ASC 260 “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2019 and 2018, the Company had 22,154,782 and 11,990,000 potentially dilutive shares outstanding, which were excluded from the calculation of diluted EPS, respectively.

 

  (o) Comprehensive Loss

 

Comprehensive loss consists of net loss and foreign currency cumulative translation adjustment.

 

New Accounting Pronouncements

 

Adopted in the Current Year

 

  (p) Leases

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.

 

The Company adopted the new standard effective January 1, 2019 and elected the modified retrospective for the transition. The Company elected the following practical expedients:

 

  ●  Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
     
  Package of practical expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Company to continue classifying its leases at transition in substantially the same manner.
     
  Single component practical expedient – permits the Company to not separate lease and non-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the condensed consolidated statement of operations.
     
  Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. Upon transition the Company recognized lease assets and lease liabilities principally for its office lease. When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 10%. Refer to Notes 6 and 9.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.19.2
Deposits
3 Months Ended
Mar. 31, 2019
Deposits [Abstract]  
Deposits

3. Deposits

 

Included in prepaid expenses and deposits for the three months ended March 31, 2019, is approximately $161,311 relating to field insurance for the Turkey Operations.

 

Included in prepaid expenses and deposits for the year ended December 31, 2018, is approximately $237,791 relating to field insurance for the Turkey Operations.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.19.2
Restricted Cash
3 Months Ended
Mar. 31, 2019
Restricted Cash [Abstract]  
Restricted Cash

4. Restricted Cash

 

The restricted cash relates to drilling bonds provided to GDPA (General Directorate of Petroleum Affairs) for the exploration licenses due to Turkish Petroleum Law. The amounts are for 2% of the annual work budget of the different Turkish licenses which is submitted to GDPA on an annual basis.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.19.2
Oil and Natural Gas Properties
3 Months Ended
Mar. 31, 2019
Extractive Industries [Abstract]  
Oil and Natural Gas Properties

5. Oil and Natural Gas Properties

 

    Unproven properties     Proven properties        
    Bulgaria     Turkey     Total  
January 1, 2018   $ 3,083,831     $ 2,639,563     $ 5,723,394  
Foreign currency translation change     (3,697 )     -       (3,697 )
Expenditures     37,095       467,015       504,110  
Depletion     -       (700,219 )     (700,219 )
Asset retirement cost addition     -       1,127,344       1,127,344  
December 31, 2018   $ 3,117,229     $ 3,533,703     $ 6,650,932  
Foreign currency translation change     (1,311 )     -       (1,311 )
Expenditures     -       31,048       31,048  
Depletion     -       (151,400 )     (151,400 )
March 31, 2019   $ 3,115,918     $ 3,413,351     $ 6,529,269  

 

Bulgaria

 

The Company holds a 98,205-acre oil and natural gas exploration claim in the Dobrudja Basin located in northeast Bulgaria. The Company intends to conduct exploration for natural gas and test production activities over a five-year period in accordance with or exceeding its minimum work program obligation. The Company’s commitment is to perform geological and geophysical exploration activities in the first 3 years of the initial term (the “Exploration and Geophysical Work Stage”), followed by drilling activities in years 4 and 5 of the initial term (the “Data Evaluation and Drilling Stage”). The Company is required to drill 10,000 meters (approximately 32,800 feet) of new wellbore (which may be vertical, horizontal, or diagonal) and conduct other exploration activities during the initial term. The Company intends to commence its work program efforts once it receives all regular regulatory approvals of its work programs.

 

Turkey

 

Cendere oil field

 

The primary asset of the Trillion Energy Turkey Companies is the Cendere onshore oil field, which is a profitable oil field located in South East Turkey having a total of 25 wells. The Cendere Field was first discovered in 1988. Oil production commenced during 1990. The operator of the Cendere Field is TPAO. The Company’s interest is 19.6% for all wells except for wells C-13, C-15 and C-16, for which its interest is 9.8%. The produced oil has a gravity of 27.5o API.

 

The Cendere Field is a long term low decline oil reserve. The Company has a 19.6% interest in the Cendere oil field located in Southeast Turkey. This mature oilfield consistently produces 150 bopd (barrels oil per day) net to the Company. During April 2019, the Company’s average net oil was 128.17 bopd at 96% water cut.

 

At December 31, 2018, the Cendere field was producing 170 barrels of oil equivalent per day, net to the Trillion Energy Turkey Companies; and averaged 150 barrels of oil equivalent per day during 2018 net to the Trillion Energy Turkey Companies. After the initial development of the Cendere Field, oil production was approximately 2,000 bopd from three wells and which peaked at approximately 7,000 bopd in 1992, when additional wells were put into production. The field started to produce water during the first year of production. As of May 1, 2019, 20.3MMbbls of oil have been produced from the Cendere Field.

 

A description of the Cendere Field geological and reservoir characteristics is as follows. The reservoirs are located in the South East Anatolian Basin and within the Middle Cretaceous period. The carbonated Derdere Formation is the main reservoir in Cendere Field and has dolomitization and fracturing, which enhance its production characteristics. There are also four additional oil reservoirs contained within Cendere Field. The Cendere Field is covered by 54 km2 of 3D seismic that was acquired in 2004.

 

The field was developed using a collection of dispersed oil wells from which production is collected and exported to the Cendere gathering station. The produced oil is exported to the TPAO Karakus processing facility which then is transported onwards to the BOTAS-operated oil pipeline. There are 20 well pads which currently house 16 producing wells spread over an area of approximately 15 square kilometers. A field gathering station, located to the southwest of the Cendere Field collects the oil and produced water from a collection of flowlines and manifolds.

 

The South Akcakoca Sub-Basin (“SASB”)

 

The Company owns offshore production licenses called the South Akcakoca Sub-Basin (“SASB”). The Company now owns a 49% working interest in SASB, 12.25% which was obtained during January 2018. The additional interest was acquired with cash of $309,515, 1,000,000 shares issued on November 22, 2017 fair valued at $90,000 and a further share issuance of 500,000 shares on January 30, 2018 fair valued at $67,500 for total consideration of $467,015. SASB has four producing fields, each with a production platform plus subsea pipelines that connect the fields to an onshore gas plant. The four SASB fields are located off the north coast of Turkey towards the western end of the Black Sea in water depths ranging from 60 to100 meters. Gas is produced from Eocene age sandstone reservoirs at subsea depths ranging from 1,100 to1,800 meters.

 

Bakuk gas field

 

The Company also owns a 50% operated interest in the Bakuk gas field located near the Syrian border. The Bakuk field is shut-in with no plans to revive production in the near term.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.19.2
Property and Equipment
3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Property and Equipment

6. Property and Equipment

 

    Operating lease asset     Leasehold improvements     Other equipment     Total  
January 1, 2018   $ -     $ 82,069     $ 15,708     $ 97,777  
Foreign currency translation change     -       (17,793 )     (13,155 )     (30,948 )
Expenditures     -       897       84,827       85,724  
Disposals     -       -       (16,990 )     (16,990 )
Depreciation     -       (20,697 )     (8,711 )     (29,408 )
December 31, 2018   $ -     $ 44,476     $ 61,679     $ 106,155  
Additions     60,390       -       -       60,390  
Foreign currency translation change     (3,812 )     (2,896 )     (4,138 )     (10,846 )
Depreciation     (4,508 )     (3,442 )     (4,403 )     (12,353 )
March 31, 2019   $ 52,071     $ 38,138     $ 53,138     $ 143,346  

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.19.2
Note Receivable
3 Months Ended
Mar. 31, 2019
Receivables [Abstract]  
Note Receivable

7. Note Receivable

 

In April 2015, the Company loaned $38,570 to a Bulgarian company pursuant to a revolving credit facility, enabling such Bulgarian company to buy and manage land in Bulgaria to be leased by the Company for future well sites. The credit facility has a maximum loan obligation of BGN 1,000,000 ($585,114 USD at March 31, 2019) bears interest at 6.32%, has a five-year term and is secured by the land the Bulgarian company buys. Payment on the facility is due the earlier of the end of the five-year term (April 6, 2020) or demand by the Company. As of March 31, 2019, the outstanding balance on the loan obligation was $48,217 (December 31, 2018: $49,192). The change in balance was due to changes in foreign currency translations.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.19.2
Loans Payable
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Loans Payable

8. Loans Payable

 

As at   March 31, 2019     December 31, 2018  
Interest bearing loans   $ 374,051     $ 368,113  
Non-interest-bearing loans     14,955       11,955  
Total   $ 389,006     $ 380,068  

 

Loans bearing interest, accrue at 10% per annum are all unsecured. All loans are due on demand. No interest has been inputted on the non-interest-bearing loans as it would be immaterial to the financial statements.

XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.2
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases

9. Leases

 

The Company leases certain assets under lease agreements. The lease liability consists of a single lease for office space which was classified as an operating lease. Upon adoption of Topic 842, on January 1, 2019 the Company recognized an addition to right-of-use assets of $60,309 and lease liabilities of $59,076. The difference between the recorded right-of-use assets and lease liabilities is mainly due to the reclassification of prepaid leasehold improvements incurred in lieu of twelve months rent which was included within the right-of-use asset recognized upon transition. As of March 31, 2019, the lease had remaining terms of 3 years and a weighted average remaining lease term of 3 years. Operating right-of-use assets and lease liabilities have been included within property and equipment and lease liabilities on the Company’s condensed consolidated balance sheet as follows:

 

Right-of-use asset   March 31, 2019  
Lease asset   $ 52,071  
Leasehold improvements     38,138  
Total right-of-use asset   $ 90,209  

 

Lease liability   March 31, 2019  
Current portion   $ 15,465  
Long-term portion     35,958  
Total lease liability   $ 51,423  

 

Operating lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 10% in determining its lease liabilities. The discount rate was derived from the Company’s assessment of current borrowings.

 

Operating lease right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.

 

Accretion on operating lease liabilities for the three months ended March 31, 2019 was $1,424. Principal payments against the operating lease liabilities for the three months ended March 31, 2019 was $5,264.

 

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of March 31, 2019 for the next five years and thereafter are as follows:

 

2019   $ 14,933  
2020     19,911  
2021     19,911  
2022     4,978  
2023     -  
Thereafter     -  
Total future minimum lease payments   $ 59,733  
Discount     (8,310 )
Total   $ 51,423  

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.2
Asset Retirement Obligations
3 Months Ended
Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligations

10. Asset Retirement Obligations

 

Asset retirement obligations (“AROs”) associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. Our ARO is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs.

 

The Company estimated an ARO for the addition of 12.25% of the South Akcakoca Sub Basin as disclosed in Note 2. For the current period addition, the Company used 2.5% as inflation rate and used a risk-free rate of 10% to present value the obligation.

 

The following is a description of the Company’s asset retirement obligations:

 

    March 31, 2019     December 31, 2018  
             
Asset retirement obligations at beginning of period   $ 4,026,129     $ 2,527,259  
Additions     -       1,127,344  
Accretion expense     100,653       371,526  
Asset retirement obligations at end of period   $ 4,126,782     $ 4,026,129  

XML 28 R17.htm IDEA: XBRL DOCUMENT v3.19.2
Common Stock
3 Months Ended
Mar. 31, 2019
Equity [Abstract]  
Common Stock

11. Common Stock

 

For the three months ended March 31, 2019

 

  (a) On February 15, 2019, the Company issued 112,500 at $0.10 per share for gross proceeds of $11,250, pursuant to a private placement closed on November 12, 2018, and included in stock subscriptions and to be issued as of December 31, 2018. Each common share having ½ of one share purchase warrant attached, resulting in the issuance of 56,250 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.
     
  (b) On February 15, 2019, the Company issued 150,000 common shares at $0.15 per share for gross proceeds of $22,500, pursuant to a private placement closed on November 12, 2018, and included in stock subscriptions and to be issued as of December 31, 2018. Each common share having one share purchase warrant attached, resulting in the issuance of 150,000 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.

 

For the three months ended March 31, 2018

 

  (a) During the period, the Company closed several private placements with the issuance of 6,550,000 shares of common stock, at $0.10 per share for gross proceeds of $655,000. Each common share having ½ of one share purchase warrant attached, resulting in the issuance of 3,275,000 warrants. Each whole share purchase warrant is exercisable for a period of 24 months at an exercise price of $0.30 per share of common stock.
     
  (b) The Company received a further $20,000 in subscriptions, which were closed subsequent to period end and issued 670,000 shares to management and a consultant valued at $80,400, which were outstanding at December 31, 2017.
     
  (c) On a private placement, a broker fee of $7,250 was paid and offset against paid up capital.

 

  (d) On January 30, 2018, the Company issued 500,000 shares of the company’s common stock as partial consideration of an additional 12.25% of the South Akcakoca Sub Basin (“SASB”) gas field. The common shares were fair valued at $67,500 based on the closing price of the stock on the date of issuance.
     
  (e) On March 5, 2018 the Company settled note payables of $250,000 for 2,500,000. The market price of the stock on the date of settlement was $0.141 and loss of $102,500 was recorded.

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Options
3 Months Ended
Mar. 31, 2019
Share-based Payment Arrangement [Abstract]  
Stock Options

12. Stock Options

 

The Board of Directors adopted the Park Place Energy Corp. 2013 Long-Term Incentive Equity Plan (the “Incentive Plan” or “2013 Plan”) effective as of October 29, 2013. The Incentive Plan permits grants of stock options (including incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock awards, and other stock-based awards.

 

The Incentive Plan authorizes the following types of awards:

 

  incentive stock options and nonqualified stock options to purchase Common Stock at a set price per share;
  stock appreciation rights (“SARs”) to receive upon exercise Common Stock or cash equal to the appreciation in value of a share of Common Stock;
  restricted stock, which are shares of Common Stock granted subject to a restriction period and/or a condition which, if not satisfied, may result in the complete or partial forfeiture of the shares;
  other stock-based awards, which provide for awards denominated in or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock of the Company, which may include performance shares or options and restricted stock units which provide for shares to be issued or cash to be paid upon the lapse of predetermined restrictions.

 

Under the 2013 Plan, the maximum number of shares of authorized stock that may be delivered is 10% of the total number of shares of common stock issued and outstanding of the Company as determined on the applicable date of grant of an award under the 2013 Plan. Under the 2013 Plan, the exercise price of each option (or other stock-based award) shall not be less than the market price of the Company’s stock as calculated immediately preceding the day of the grant. The vesting schedule for each option or other stock-based award shall be specified by the Board of Directors at the time of grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.

 

A continuity of the Company’s outstanding stock options for the three months ended March 31, 2019 is presented below:

 

    Number of
options
    Weighted average
exercise price
 
Outstanding, December 31, 2018     4,565,000     $ 0.13  
Expired     (115,000 )     0.10  
Outstanding, March 31, 2019     4,450,000     $ 0.13  

 

At March 31, 2019, the Company had the following outstanding stock options:

 

Number     Exercise Price     Expiry Date   Number Vested  
  100,000     $ 0.19     March 14, 2020     100,000  
  900,000     $ 0.18     March 26, 2021     900,000  
  1,000,000     $ 0.12     September 15, 2022     1,000,000  
  2,450,000     $ 0.12     October 24, 2023     2,450,000  
  4,450,000                   4,450,000  

 

As of March 31, 2019, all stock options have fully vested. The weighted average remaining contractual life of outstanding stock options is 3.72 years (December 31, 2018: 3.87). The aggregate intrinsic value of the stock options at March 31, 2019 is $131,100 (December 31, 2018: $Nil).

 

There was no compensation expense related to stock options recognized during the three months ended March 31, 2019 and 2018. At March 31, 2019, the Company has no unrecognized compensation expense related to stock options.

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.19.2
Warrants
3 Months Ended
Mar. 31, 2019
Warrants and Rights Note Disclosure [Abstract]  
Warrants

13. Warrants

 

A continuity of the Company’s outstanding share purchase warrants for the three months ended March 31, 2019 is presented below:

 

    Number of
warrants
    Weighted average
exercise price
 
Outstanding, December 31, 2018     17,498,532     $ 0.25  
Issued     206,250       0.30  
Outstanding, March 31, 2019     17,704,782     $ 0.25  

 

At March 31, 2019, the Company had the following outstanding share purchase warrants:

 

Number   Exercise Price       Expiry Date
1,650,000   $ 0.30       January 30, 2020
700,000     0.30       February 9, 2020
500,000     0.30       February 21, 2020
1,675,000     0.30       March 7, 2020
50,000     0.30       April 8, 2020
50,000     0.30       May 20, 2020
1,000,000     0.30       July 1, 2020
350,000     0.30       August 19, 2020
160,531     0.30       August 20, 2020
4,538,000     0.30       October 26, 2020
1,125,000     0.30       November 7, 2020
200,001     0.30       November 23, 2020
5,500,000     0.15       November 30, 2020
206,250     0.30       February 15, 2021
17,704,782              

 

The weighted average remaining contractual life of outstanding warrants is 1.41 years (December 31, 2018: 1.65).

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.19.2
Related Party Transactions
3 Months Ended
Mar. 31, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

14. Related Party Transactions

 

At March 31, 2019, $104,945 of accounts payable were to related parties as compared to $67,345 at December 31, 2018 for outstanding management and consulting fees. The amounts owed, and owing are unsecured, non-interest bearing, and due on demand.

 

During the three months ended March 31, 2019, included in general and administrative expenses is $37,500 (2018: $50,000) in respect of directors and management fees.

XML 32 R21.htm IDEA: XBRL DOCUMENT v3.19.2
Segment Information
3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
Segment Information

15. Segment Information

 

During 2019 and 2018, the Company’s operations were in the resource industry in Bulgaria, and Turkey with head offices in the United States and a satellite office in Sofia, Bulgaria. The Company operated a few segments, a head office in Canada, an oil and natural gas operations in Turkey and its oil and natural gas properties are located in Bulgaria.

 

For the period ended March 31, 2019

 

    Bulgaria     North America     Turkey     Total  
Revenue                                
Oil and gas sales   $ -     $ -     $ 1,024,784     $ 1,024,784  
                                 
Cost and expenses                                
Production     -       -       658,453       684,453  
Depletion     -       -       151,400       151,400  
Depreciation     -       -       12,353       12,353  
Accretion of asset retirement obligation     -       -       100,653       100,653  
General and administrative     459       160,243       256,778       417,480  
Total (recovery) expenses   $ 459     $ 160,243     $ 1,179,637     $ 1,340,339  
                                 
Income (loss) before other income (expenses)   $ (459 )   $ (160,243 )   $ (154,853 )   $ (315,555 )
Other income (expenses)                                
Interest income     -       -       6,447       6,447  
Interest expense     -       (9,138 )     -       (9,138 )
Accretion of operating lease liability     -       -       (1,424 )     (1,424 )
Foreign exchange gain (loss)     -       2,067       2,663       4,730  
Other expense     -       -       (77 )     (77 )
Total other income (expense)   $ -     $ (7,071 )   $ 7,609     $ 538  
                                 
Net Income (loss)   $ (459 )   $ (167,314 )   $ (147,244 )   $ (315,017 )
                                 
Long Lived Assets   $ 3,115,918     $ -     $ 3,525,649     $ 6,641,567  

 

For the period ended March 31, 2018

 

    Bulgaria     North America     Turkey     Total  
Revenue                                
Oil and gas sales   $ -     $ -     $ 964,022     $ 964,022  
                                 
Cost and expenses                                
Production     -       -       711,621       711,621  
Depletion     -       -       163,049       163,049  
Depreciation     -       -       5,348       5,348  
Accretion of asset retirement obligation     -       -       84,058       84,058  
General and administrative     (150 )     178,344       242,772       420,966  
Total (recovery) expenses   $ (150 )   $ 178,344     $ 1,206,848     $ 1,385,042  
                                 
Income (loss) before other income (expenses)   $ 150     $ (178,344 )   $ (242,826 )   $ (421,020 )
Other income (expenses)                                
Interest income     -       -       3,343       3,343  
Interest expense     -       (22,183 )     -       (22,183 )
Foreign exchange gain (loss)     -       2,455       (10,258 )     (7,803 )
Loss on debt settlement     -       (102,500 )     -       (102,500 )
Total other income (expense)   $ -     $ (122,228 )   $ (6,915 )   $ (129,143 )
                                 
Net Income (loss)   $ 150     $ (300,572 )   $ (249,741 )   $ (550,163 )
                                 
Long Lived Assets   $ -     $ -     $ 4,163,304     $ 4,163,304  

XML 33 R22.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes

16. Income Taxes

 

The Company is subject to United States federal and state income taxes at a rate of 21%. The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

   

Three Months Ended

March 31,

 
    2019     2018  
Benefit at statutory rate   $ (66,154 )   $ (115,534 )
Permanent differences and other:     -       -  
Valuation allowance change     66,154       115,534  
Income tax provision   $     $  

XML 34 R23.htm IDEA: XBRL DOCUMENT v3.19.2
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Basis of Presentation

  (a) Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019.

 

The consolidated balance sheet at December 31, 2018, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

For further information, refer to the consolidated financial statements and footnotes thereto included in Trillion Energy’s annual report on Form 10-K for the year ended December 31, 2018.

 

The Company has suffered recurring losses from operations and the Company has a significant working capital deficiency. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

Use of Estimates

  (b) Use of Estimates

 

The preparation of consolidated financial statements 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 the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

  (c) Cash and Cash Equivalents

 

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Revenue Recognition

  (d) Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The Company adopted this standard on a modified retroactive basis on January 1, 2018. No financial statement impact occurred upon adoption.

 

Revenue from Contracts with Customers

 

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products.

 

Performance Obligations and Significant Judgments

 

The Company sells oil and natural gas products in Turkey. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product.

 

The oil and natural gas are typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil is transferred. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under the Company’s natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For the Company’s other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, the Company has determined that the Company is the principal in the arrangement and the processors are the Company’s customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor.

 

Transfer of control drives the presentation of transportation and gathering costs within the accompanying unaudited consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying unaudited consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue.

 

A portion of the Company’s product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

 

For the Company’s product sales that have a contract term greater than one year, the Company uses the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period.

 

The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained.

Accounts Receivable

  (e) Accounts Receivable

 

Accounts receivable consist of oil and natural gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company deems all accounts receivable to be collectable and has not recorded any allowance for doubtful accounts.

Long-lived Assets

  (f) Long-Lived Assets

 

In accordance with ASC 360 “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances that could trigger a review include, but are not limited to: significant decreases in the market price of the assets; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the assets; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the assets; and current expectation that the assets will more likely than not be sold or disposed significantly before the end of their estimated useful life. Recoverability is assessed based on the carrying amount of the assets and their fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the assets, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount of the assets is not recoverable and exceeds fair value.

Oil & Natural Gas Properties

  (g) Oil & Natural Gas Properties

 

The Company follows the full cost method of accounting for oil and natural gas operations, whereby all costs of exploring for and developing oil and natural gas reserves are capitalized and accumulated in cost centers on a country-by-country basis. Costs include: license and land acquisition costs, geological, engineering, geophysical, seismic, and other data, carrying charges on non-productive properties and costs of drilling and completing both productive and non-productive wells. General and administrative costs which are associated with acquisition, exploration and development activities are capitalized. General and administrative costs are capitalized other than to the extent of the Company’s working interest in operated capital expenditure programs on which operator’s fees have been charged equivalent to standard industry operating agreements.

 

The costs in each cost center, including the costs of well equipment, are depleted and depreciated using the unit-of-production method based on the estimated proved reserves before royalties. The costs of acquiring and evaluating significant unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.

 

The capitalized costs (less accumulated depletion and depreciation in each cost center) are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet date) plus the cost (net of impairments) of unproved properties. The total capitalized costs, less accumulated depletion and depreciation, site restoration provision and future income taxes of all cost centers, is further limited to an amount equal to the future net revenue from proved reserves plus the cost (net of impairments) of unproved properties of all cost centers less estimated future site restoration costs, general and administrative expenses, financing costs and income taxes.

 

Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly decrease the Company’s total proven reserves.

Property and Equipment

  (h) Property and Equipment

 

Property and equipment are stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives are: other equipment are depreciated over 20 years; and operating lease right-of-use assets and leasehold improvements are depreciated over the term of the lease.

Asset Retirement Obligations

  (i) Asset Retirement Obligations

 

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that results from the acquisition, construction, development, and/or normal use of the long-lived assets. The Company also records a corresponding asset that is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

Financial Instruments and Fair Value Measurement

  (j) Financial Instruments and Fair Value Measurement

 

The carrying amounts reported in the consolidated balance sheets for cash equivalents, account receivables, notes receivable, accounts payable and accrued liabilities and loans payable approximate fair value because of the immediate or short-term maturity of these financial instruments. None of these instruments are held for trading purposes.

Income Taxes

  (k) Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

As of December 31, 2018, and 2017, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. The Company did not incur any penalties or interest during the years ended December 31, 2018 and 2017. On December 22, 2017 the U.S. enacted the Tax Cuts and Jobs Act (“the Tax Act”) which significantly changed U.S. tax law. The Tax Act lowered the Company’s statutory federal income tax rate from a maximum of 39% to a rate of 21% effective January 1, 2018. The company has deferred tax losses and assets and they were adjusted as a result of the change in tax law reducing the federal income tax rate. The Company’s tax years 2014 and forward remain open.

Foreign Currency Translation

  (l) Foreign Currency Translation

 

Operations outside the United States prepare financial statements in currencies other than the United States dollar. The income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity and other comprehensive income. The functional currency of the Company’s Bulgarian operations is considered to be the Bulgarian Lev. The functional currency of the Company’s Turkish operations is considered to be the Turkish lira.

Stock-Based Compensation

  (m) Stock-Based Compensation

 

The Company records stock-based compensation in accordance with ASC 718 (“Compensation – Stock Compensation”) using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, and actual and projected stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the requisite service period.

Loss Per Share

  (n) Loss per Share

 

The Company computes loss per share of Company stock in accordance with ASC 260 “Earnings per Share” which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of March 31, 2019 and 2018, the Company had 22,154,782 and 11,990,000 potentially dilutive shares outstanding, which were excluded from the calculation of diluted EPS, respectively.

Comprehensive Loss

  (o) Comprehensive Loss

 

Comprehensive loss consists of net loss and foreign currency cumulative translation adjustment.

 

New Accounting Pronouncements

 

Adopted in the Current Year

Leases

  (p) Leases

 

In February 2016, the Financial Accounting Standards Board, or FASB, established Topic 842, Leases, by issuing Accounting Standards Update (“ASU”) No. 2016-02, which requires lessors to classify leases as a sales-type, direct financing, or operating lease and requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements.

 

The Company adopted the new standard effective January 1, 2019 and elected the modified retrospective for the transition. The Company elected the following practical expedients:

 

  ●  Transition method practical expedient – permits the Company to use the effective date as the date of initial application. Upon adoption, the Company did not have a cumulative-effect adjustment to the opening balance of retained earnings. Financial information and disclosures for periods before January 1, 2019 were not updated.
     
  Package of practical expedients – permits the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification, and initial direct costs. This allowed the Company to continue classifying its leases at transition in substantially the same manner.
     
  Single component practical expedient – permits the Company to not separate lease and non-lease components of leases. Upon transition, rental income, expense reimbursement, and other were aggregated into a single line within rental and other revenues on the condensed consolidated statement of operations.
     
  Short-term lease practical expedient – permits the Company not to recognize leases with a term equal to or less than 12 months.

 

Lessee Accounting

 

The new standard requires lessees to recognize a right-of-use asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating at inception, with classification affecting the pattern and recording of expenses in the statement of operations. Upon transition the Company recognized lease assets and lease liabilities principally for its office lease. When measuring lease liabilities for leases that were classified as operating leases, the Company discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied was 10%. Refer to Notes 6 and 9.

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.19.2
Oil and Natural Gas Properties (Tables)
3 Months Ended
Mar. 31, 2019
Extractive Industries [Abstract]  
Schedule of Oil and Natural Gas Properties

    Unproven properties     Proven properties        
    Bulgaria     Turkey     Total  
January 1, 2018   $ 3,083,831     $ 2,639,563     $ 5,723,394  
Foreign currency translation change     (3,697 )     -       (3,697 )
Expenditures     37,095       467,015       504,110  
Depletion     -       (700,219 )     (700,219 )
Asset retirement cost addition     -       1,127,344       1,127,344  
December 31, 2018   $ 3,117,229     $ 3,533,703     $ 6,650,932  
Foreign currency translation change     (1,311 )     -       (1,311 )
Expenditures     -       31,048       31,048  
Depletion     -       (151,400 )     (151,400 )
March 31, 2019   $ 3,115,918     $ 3,413,351     $ 6,529,269  

XML 36 R25.htm IDEA: XBRL DOCUMENT v3.19.2
Property and Equipment (Tables)
3 Months Ended
Mar. 31, 2019
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

    Operating lease asset     Leasehold improvements     Other equipment     Total  
January 1, 2018   $ -     $ 82,069     $ 15,708     $ 97,777  
Foreign currency translation change     -       (17,793 )     (13,155 )     (30,948 )
Expenditures     -       897       84,827       85,724  
Disposals     -       -       (16,990 )     (16,990 )
Depreciation     -       (20,697 )     (8,711 )     (29,408 )
December 31, 2018   $ -     $ 44,476     $ 61,679     $ 106,155  
Additions     60,390       -       -       60,390  
Foreign currency translation change     (3,812 )     (2,896 )     (4,138 )     (10,846 )
Depreciation     (4,508 )     (3,442 )     (4,403 )     (12,353 )
March 31, 2019   $ 52,071     $ 38,138     $ 53,138     $ 143,346  

XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.2
Loans Payable (Tables)
3 Months Ended
Mar. 31, 2019
Debt Disclosure [Abstract]  
Schedule of Loans Payable

As at   March 31, 2019     December 31, 2018  
Interest bearing loans   $ 374,051     $ 368,113  
Non-interest-bearing loans     14,955       11,955  
Total   $ 389,006     $ 380,068  

XML 38 R27.htm IDEA: XBRL DOCUMENT v3.19.2
Leases (Tables)
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Summary of Operating Right-of-use Assets and Lease Liabilities

Operating right-of-use assets and lease liabilities have been included within property and equipment and lease liabilities on the Company’s condensed consolidated balance sheet as follows:

 

Right-of-use asset   March 31, 2019  
Lease asset   $ 52,071  
Leasehold improvements     38,138  
Total right-of-use asset   $ 90,209  

 

Lease liability   March 31, 2019  
Current portion   $ 15,465  
Long-term portion     35,958  
Total lease liability   $ 51,423  

Summary of Operating Future Minimum Lease Payments

Future minimum lease payments to be paid by the Company as a lessee for operating leases as of March 31, 2019 for the next five years and thereafter are as follows:

 

2019   $ 14,933  
2020     19,911  
2021     19,911  
2022     4,978  
2023     -  
Thereafter     -  
Total future minimum lease payments   $ 59,733  
Discount     (8,310 )
Total   $ 51,423  

XML 39 R28.htm IDEA: XBRL DOCUMENT v3.19.2
Asset Retirement Obligations (Tables)
3 Months Ended
Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of Asset Retirement Obligations

The following is a description of the Company’s asset retirement obligations:

 

    March 31, 2019     December 31, 2018  
             
Asset retirement obligations at beginning of period   $ 4,026,129     $ 2,527,259  
Additions     -       1,127,344  
Accretion expense     100,653       371,526  
Asset retirement obligations at end of period   $ 4,126,782     $ 4,026,129  

XML 40 R29.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Options (Tables)
3 Months Ended
Mar. 31, 2019
Share-based Payment Arrangement [Abstract]  
Summary of Stock Options Activity

A continuity of the Company’s outstanding stock options for the three months ended March 31, 2019 is presented below:

 

    Number of
options
    Weighted average
exercise price
 
Outstanding, December 31, 2018     4,565,000     $ 0.13  
Expired     (115,000 )     0.10  
Outstanding, March 31, 2019     4,450,000     $ 0.13  

Schedule of Stock Options Outstanding

At March 31, 2019, the Company had the following outstanding stock options:

 

Number     Exercise Price     Expiry Date   Number Vested  
  100,000     $ 0.19     March 14, 2020     100,000  
  900,000     $ 0.18     March 26, 2021     900,000  
  1,000,000     $ 0.12     September 15, 2022     1,000,000  
  2,450,000     $ 0.12     October 24, 2023     2,450,000  
  4,450,000                   4,450,000  

XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.2
Warrants (Tables)
3 Months Ended
Mar. 31, 2019
Warrants and Rights Note Disclosure [Abstract]  
Schedule of Stockholders' Equity Note, Warrants or Rights, Activity

A continuity of the Company’s outstanding share purchase warrants for the three months ended March 31, 2019 is presented below:

 

    Number of
warrants
    Weighted average
exercise price
 
Outstanding, December 31, 2018     17,498,532     $ 0.25  
Issued     206,250       0.30  
Outstanding, March 31, 2019     17,704,782     $ 0.25  

Schedule of Warrant Outstanding

At March 31, 2019, the Company had the following outstanding share purchase warrants:

 

Number   Exercise Price       Expiry Date
1,650,000   $ 0.30       January 30, 2020
700,000     0.30       February 9, 2020
500,000     0.30       February 21, 2020
1,675,000     0.30       March 7, 2020
50,000     0.30       April 8, 2020
50,000     0.30       May 20, 2020
1,000,000     0.30       July 1, 2020
350,000     0.30       August 19, 2020
160,531     0.30       August 20, 2020
4,538,000     0.30       October 26, 2020
1,125,000     0.30       November 7, 2020
200,001     0.30       November 23, 2020
5,500,000     0.15       November 30, 2020
206,250     0.30       February 15, 2021
17,704,782              

XML 42 R31.htm IDEA: XBRL DOCUMENT v3.19.2
Segment Information (Tables)
3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
Schedule of Financial Information for Geographical Segments

For the period ended March 31, 2019

 

    Bulgaria     North America     Turkey     Total  
Revenue                                
Oil and gas sales   $ -     $ -     $ 1,024,784     $ 1,024,784  
                                 
Cost and expenses                                
Production     -       -       658,453       684,453  
Depletion     -       -       151,400       151,400  
Depreciation     -       -       12,353       12,353  
Accretion of asset retirement obligation     -       -       100,653       100,653  
General and administrative     459       160,243       256,778       417,480  
Total (recovery) expenses   $ 459     $ 160,243     $ 1,179,637     $ 1,340,339  
                                 
Income (loss) before other income (expenses)   $ (459 )   $ (160,243 )   $ (154,853 )   $ (315,555 )
Other income (expenses)                                
Interest income     -       -       6,447       6,447  
Interest expense     -       (9,138 )     -       (9,138 )
Accretion of operating lease liability     -       -       (1,424 )     (1,424 )
Foreign exchange gain (loss)     -       2,067       2,663       4,730  
Other expense     -       -       (77 )     (77 )
Total other income (expense)   $ -     $ (7,071 )   $ 7,609     $ 538  
                                 
Net Income (loss)   $ (459 )   $ (167,314 )   $ (147,244 )   $ (315,017 )
                                 
Long Lived Assets   $ 3,115,918     $ -     $ 3,525,649     $ 6,641,567  

 

For the period ended March 31, 2018

 

    Bulgaria     North America     Turkey     Total  
Revenue                                
Oil and gas sales   $ -     $ -     $ 964,022     $ 964,022  
                                 
Cost and expenses                                
Production     -       -       711,621       711,621  
Depletion     -       -       163,049       163,049  
Depreciation     -       -       5,348       5,348  
Accretion of asset retirement obligation     -       -       84,058       84,058  
General and administrative     (150 )     178,344       242,772       420,966  
Total (recovery) expenses   $ (150 )   $ 178,344     $ 1,206,848     $ 1,385,042  
                                 
Income (loss) before other income (expenses)   $ 150     $ (178,344 )   $ (242,826 )   $ (421,020 )
Other income (expenses)                                
Interest income     -       -       3,343       3,343  
Interest expense     -       (22,183 )     -       (22,183 )
Foreign exchange gain (loss)     -       2,455       (10,258 )     (7,803 )
Loss on debt settlement     -       (102,500 )     -       (102,500 )
Total other income (expense)   $ -     $ (122,228 )   $ (6,915 )   $ (129,143 )
                                 
Net Income (loss)   $ 150     $ (300,572 )   $ (249,741 )   $ (550,163 )
                                 
Long Lived Assets   $ -     $ -     $ 4,163,304     $ 4,163,304  

XML 43 R32.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes (Tables)
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Schedule of Reconciliation of Provision for Income Taxes

The reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows:

 

   

Three Months Ended

March 31,

 
    2019     2018  
Benefit at statutory rate   $ (66,154 )   $ (115,534 )
Permanent differences and other:     -       -  
Valuation allowance change     66,154       115,534  
Income tax provision   $     $  

XML 44 R33.htm IDEA: XBRL DOCUMENT v3.19.2
Summary of Significant Accounting Policies (Details Narrative) - shares
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Property and equipment useful life 20 years  
Statutory federal income tax rate 21.00%  
Antidilutive securities excluded from computation of earnings per share 22,154,782 11,990,000
Weighted-average discounted .rate 10.00%  
Tax Cuts and Jobs Act [Member]    
Income tax description On December 22, 2017 the U.S. enacted the Tax Cuts and Jobs Act ("the Tax Act") which significantly changed U.S. tax law. The Tax Act lowered the Company's statutory federal income tax rate from a maximum of 39% to a rate of 21% effective January 1, 2018.  
Statutory federal income tax rate 21.00%  
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.19.2
Deposits (Details Narrative) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Deposits [Abstract]    
Prepaid expenses and deposits $ 161,311 $ 237,791
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.19.2
Restricted Cash (Details Narrative)
3 Months Ended
Mar. 31, 2019
Restricted Cash [Abstract]  
Restricted cash, description The restricted cash relates to drilling bonds provided to GDPA (General Directorate of Petroleum Affairs) for the exploration licenses due to Turkish Petroleum Law. The amounts are for 2% of the annual work budget of the different Turkish licenses which is submitted to GDPA on an annual basis.
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.19.2
Oil and Natural Gas Properties (Details Narrative)
3 Months Ended 12 Months Ended
Jan. 30, 2018
USD ($)
shares
Nov. 22, 2017
USD ($)
shares
Mar. 31, 2019
USD ($)
a
ft²
Wells
bbl
Dec. 31, 2018
USD ($)
bbl
Mar. 31, 2018
MMBbls
Jan. 31, 2018
Oil and gas acreage, undeveloped, net | a     98,205      
Commitment period of exploration and geophysical work stage     3 years      
Initial term for data evaluation stage     4 years      
Initial term for drilling stage     5 years      
New well bore required to be drilled in meters | m²     10,000      
New well bore required to be drilled in feet | ft²     32,800      
Fair value of common stock     $ 8,000 $ 1,634,123    
Cendere Oil Field [Member]            
Number of wells | Wells     25      
Interest percentage for wells     19.60%      
Mature oilfield consistently produces oils description       The Cendere Field is a long term low decline oil reserve. The Company has a 19.6% interest in the Cendere oil field located in Southeast Turkey. This mature oilfield consistently produces 150 bopd (barrels oil per day) net to the Company. During April 2019, the Company's average net oil was 128.17 bopd at 96% water cut.    
Barrels of oil produced | bbl       170    
Average daily barrels of oil produced | bbl     150 150    
Cendere Oil Field [Member] | May 1, 2019 [Member]            
Barrels of oil produced | MMBbls         20.3  
Cendere Oil Field [Member] | Wells C-13, C-15, C-16 [Member]            
Interest percentage for wells     9.80%      
South Akcakoca Sub-Basin [Member]            
Working interest of the company     49.00%     12.25%
Cash with additional interest acquired   $ 309,515        
Stock issued during period of common stock | shares 500,000 1,000,000        
Fair value of common stock $ 67,500 $ 90,000        
Total consideration amount $ 467,015          
Water depth, description     The four SASB fields are located off the north coast of Turkey towards the western end of the Black Sea in water depths ranging from 60 to100 meters. Gas is produced from Eocene age sandstone reservoirs at subsea depths ranging from 1,100 to1,800 meters.      
Bakuk Gas Field [Member]            
Working interest of the company     50.00%      
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.19.2
Oil and Natural Gas Properties - Schedule of Oil and Natural Gas Properties (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Oil and gas properties, beginning balance $ 6,650,932 $ 5,723,394 $ 5,723,394
Foreign currency translation change (1,311)   (3,697)
Expenditures 31,048   504,110
Depletion (151,400) (163,049) (700,219)
Asset retirement cost addition     1,127,344
Oil and gas properties, ending balance 6,529,269   6,650,932
Unproven Properties Bulgaria [Member]      
Oil and gas properties, beginning balance 3,117,229 3,083,831 3,083,831
Foreign currency translation change (1,311)   (3,697)
Expenditures   37,095
Depletion  
Asset retirement cost addition    
Oil and gas properties, ending balance 3,115,918   3,117,229
Proven Properties Turkey [Member]      
Oil and gas properties, beginning balance 3,533,703 $ 2,639,563 2,639,563
Foreign currency translation change  
Expenditures 31,048   467,015
Depletion (151,400)   (700,219)
Asset retirement cost addition     1,127,344
Oil and gas properties, ending balance $ 3,413,351   $ 3,533,703
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.19.2
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Property and Equipment, beginning balance $ 106,155 $ 97,777 $ 97,777
Additions 60,390    
Foreign currency translation change (10,846)   (30,948)
Expenditures     85,724
Disposals     (16,990)
Depreciation (12,353) (5,348) (29,408)
Property and Equipment, ending balance 143,346   106,155
Operating Lease Asset [Member]      
Property and Equipment, beginning balance
Additions 60,390    
Foreign currency translation change (3,812)  
Expenditures    
Disposals    
Depreciation (4,508)  
Property and Equipment, ending balance 52,071  
Leasehold Improvements [Member]      
Property and Equipment, beginning balance 44,476 82,069 82,069
Additions    
Foreign currency translation change (2,896)   (17,793)
Expenditures     897
Disposals    
Depreciation (3,442)   (20,697)
Property and Equipment, ending balance 38,138   44,476
Other Equipment [Member]      
Property and Equipment, beginning balance 61,679 $ 15,708 15,708
Additions    
Foreign currency translation change (4,138)   (13,155)
Expenditures     84,827
Disposals     (16,990)
Depreciation (4,403)   (8,711)
Property and Equipment, ending balance $ 53,138   $ 61,679
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.19.2
Note Receivable (Details Narrative)
3 Months Ended
Mar. 31, 2019
USD ($)
Mar. 31, 2019
BGN (лв)
Dec. 31, 2018
USD ($)
Apr. 30, 2015
USD ($)
Note receivable $ 48,217   $ 49,192  
Borrowing capacity $ 585,114      
Line of credit facility, interest rate 6.32%      
Line of credit facility, period 5 years      
Line of credit facility, due date Apr. 06, 2020      
BGN [Member]        
Borrowing capacity | лв   лв 1,000,000    
Revolving Credit Facility [Member]        
Note receivable       $ 38,570
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.19.2
Loans Payable (Details Narrative)
Mar. 31, 2019
Debt Disclosure [Abstract]  
Loans bearing interest 10.00%
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.19.2
Loans Payable - Schedule of Loans Payable (Details) - USD ($)
Mar. 31, 2019
Dec. 31, 2018
Loans payable $ 389,006 $ 380,068
Interest Bearing Loans [Member]    
Loans payable 374,051 368,113
Non-Interest Bearing Loans [Member]    
Loans payable $ 14,955 $ 11,955
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.19.2
Leases (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2019
Jan. 02, 2019
Leases [Abstract]    
Right-of-use assets $ 90,209 $ 60,309
Lease liabilities $ 51,423 $ 59,076
Weighted average remaining lease term 3 years  
Weighted-average discounted .rate 10.00%  
Accretion on operating lease liabilities $ 1,424  
Principal payments against operating lease liabilities $ 5,264  
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.19.2
Leases - Summary of Operating Right-of-use Assets and Lease Liabilities (Details) - USD ($)
Mar. 31, 2019
Jan. 02, 2019
Dec. 31, 2018
Leases [Abstract]      
Lease asset $ 52,071    
Leasehold improvements 38,138    
Total right-of-use asset 90,209 $ 60,309  
Current portion 15,465  
Long-term portion 35,958  
Total lease liability $ 51,423 $ 59,076  
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.19.2
Leases - Summary of Operating Future Minimum Lease Payments (Details) - USD ($)
Mar. 31, 2019
Jan. 02, 2019
Leases [Abstract]    
2019 $ 14,933  
2020 19,911  
2021 19,911  
2022 4,978  
2023  
Thereafter  
Total future minimum lease payments 59,733  
Discount (8,310)  
Total $ 51,423 $ 59,076
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.19.2
Asset Retirement Obligations (Details Narrative)
3 Months Ended
Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]  
Assets purchase of additional gas percentage 12.25%
Asset retirement obligations, inflation rate 2.50%
Asset retirement obligations, risk-free rate 10.00%
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.19.2
Asset Retirement Obligations - Schedule of Asset Retirement Obligations (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Asset Retirement Obligation Disclosure [Abstract]      
Asset retirement obligations at beginning of period $ 4,026,129 $ 2,527,259 $ 2,527,259
Additions   1,127,344
Accretion expense 100,653 $ 84,058 371,526
Asset retirement obligations at end of period $ 4,126,782   $ 4,026,129
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.19.2
Common Stock (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Feb. 15, 2019
Mar. 05, 2018
Jan. 30, 2018
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Dec. 31, 2017
Proceeds from issuance of common stock       $ 8,000   $ 1,634,123  
Common stock subscriptions       15,552   $ 41,302  
Number of stock issued for purchase of assets     500,000        
Additional percentage of gas field     12.25%        
Number of stock issued for purchase of assets, value     $ 67,500        
Settlement of debts, value   $ 250,000          
Settlement of debts, shares   2,500,000          
Market price of stock   $ 0.141          
Loss on settlement of debt   $ 102,500   $ (102,500)    
Management and Consultant [Member]              
Number of stock for services             670,000
Number of stock for services, value             $ 80,400
Private Placement [Member]              
Number of common stock issued 112,500       6,550,000    
Shares issued price per share $ 0.10       $ 0.10    
Proceeds from issuance of common stock $ 11,250       $ 655,000    
Common stock, description Each common share having 1/2 of one share       Each common share having 1/2 of one share    
Warrant to purchase shares 56,250       3,275,000    
Warrant exercisable period 24 months       24 months    
Warrant exercise price per share $ 0.30       $ 0.30    
Common stock subscriptions         $ 20,000    
Payments for broker fee         $ 7,250    
Private Placement One [Member]              
Number of common stock issued 150,000            
Shares issued price per share $ 0.15            
Proceeds from issuance of common stock $ 22,500            
Common stock, description Each common share having one share            
Warrant to purchase shares 150,000            
Warrant exercisable period 24 months            
Warrant exercise price per share $ 0.30            
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Options (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Weighted average remaining life 3 years 8 months 19 days   3 years 10 months 14 days
Aggregate intrinsic value of the stock options $ 131,100  
Stock based compensation expense  
Unrecognized compensation expense related to stock options    
2013 Long-Term Incentive Equity Plan [Member]      
Total number of shares of common stock issued and outstanding percentage 10.00%    
Maximum term of options (or other stock-based award) granted 10 years    
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Options - Summary of Stock Options Activity (Details)
3 Months Ended
Mar. 31, 2019
$ / shares
shares
Share-based Payment Arrangement [Abstract]  
Number of Options, Outstanding Beginning Balance | shares 4,565,000
Number of Options, Expired | shares (115,000)
Number of Options, Outstanding Ending Balance | shares 4,450,000
Weighted Average Exercise Price, Outstanding Beginning Balance | $ / shares $ 0.13
Weighted Average Exercise Price, Expired | $ / shares 0.10
Weighted Average Exercise Price, Outstanding Ending Balance | $ / shares $ 0.13
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.19.2
Stock Options - Schedule of Stock Options Outstanding (Details)
3 Months Ended
Mar. 31, 2019
$ / shares
shares
Number of stock options 4,450,000
Number Vested 4,450,000
Exercise Price One [Member]  
Number of stock options 100,000
Exercise Price | $ / shares $ 0.19
Expiry Date Mar. 14, 2020
Number Vested 100,000
Exercise Price Two [Member]  
Number of stock options 900,000
Exercise Price | $ / shares $ 0.18
Expiry Date Mar. 26, 2021
Number Vested 900,000
Exercise Price Three [Member]  
Number of stock options 1,000,000
Exercise Price | $ / shares $ 0.12
Expiry Date Sep. 15, 2022
Number Vested 1,000,000
Exercise Price Four [Member]  
Number of stock options 2,450,000
Exercise Price | $ / shares $ 0.12
Expiry Date Oct. 24, 2023
Number Vested 2,450,000
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.19.2
Warrants (Details Narrative)
3 Months Ended 12 Months Ended
Mar. 31, 2019
Dec. 31, 2018
Warrants [Member]    
Weighted average remaining contractual life of outstanding warrants 1 year 4 months 28 days 1 year 7 months 24 days
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.19.2
Warrants - Schedule of Stockholders' Equity Note, Warrants or Rights, Activity (Details) - Warrants [Member]
3 Months Ended
Mar. 31, 2019
$ / shares
shares
Number of Warrants Outstanding, Beginning | shares 17,498,532
Number of Warrants, Issued | shares 206,250
Number of Warrants Outstanding, Ending | shares 17,704,782
Weighted Average Exercise Price Outstanding, Beginning | $ / shares $ 0.25
Weighted Average Exercise Price, Issued | $ / shares 0.30
Weighted Average Exercise Price Outstanding, Ending | $ / shares $ 0.25
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.19.2
Warrants - Schedule of Warrant Outstanding (Details)
Mar. 31, 2019
$ / shares
shares
Number of Warrants 17,704,782
Warrant Exercise Price One [Member]  
Number of Warrants 1,650,000
Exercise Price | $ / shares $ 0.30
Expiry Date Jan. 30, 2020
Warrant Exercise Price Two [Member]  
Number of Warrants 700,000
Exercise Price | $ / shares $ 0.30
Expiry Date Feb. 09, 2020
Warrant Exercise Price Three [Member]  
Number of Warrants 500,000
Exercise Price | $ / shares $ 0.30
Expiry Date Feb. 21, 2020
Warrant Exercise Price Four [Member]  
Number of Warrants 1,675,000
Exercise Price | $ / shares $ 0.30
Expiry Date Mar. 07, 2020
Warrant Exercise Price Five [Member]  
Number of Warrants 50,000
Exercise Price | $ / shares $ 0.30
Expiry Date Apr. 08, 2020
Warrant Exercise Price Six [Member]  
Number of Warrants 50,000
Exercise Price | $ / shares $ 0.30
Expiry Date May 20, 2020
Warrant Exercise Price Seven [Member]  
Number of Warrants 1,000,000
Exercise Price | $ / shares $ 0.30
Expiry Date Jul. 01, 2020
Warrant Exercise Price Eight [Member]  
Number of Warrants 350,000
Exercise Price | $ / shares $ 0.30
Expiry Date Aug. 19, 2020
Warrant Exercise Price Nine [Member]  
Number of Warrants 160,531
Exercise Price | $ / shares $ 0.30
Expiry Date Aug. 20, 2020
Warrant Exercise Price Ten [Member]  
Number of Warrants 4,538,000
Exercise Price | $ / shares $ 0.30
Expiry Date Oct. 26, 2020
Warrant Exercise Price Eleven [Member]  
Number of Warrants 1,125,000
Exercise Price | $ / shares $ 0.30
Expiry Date Nov. 07, 2020
Warrant Exercise Price Twelve [Member]  
Number of Warrants 200,001
Exercise Price | $ / shares $ 0.30
Expiry Date Nov. 23, 2020
Warrant Exercise Price Thirteen [Member]  
Number of Warrants 5,500,000
Exercise Price | $ / shares $ 0.15
Expiry Date Nov. 30, 2020
Warrant Exercise Price Fourteen [Member]  
Number of Warrants 206,250
Exercise Price | $ / shares $ 0.30
Expiry Date Feb. 15, 2021
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.19.2
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Accounts payable related parties $ 104,945   $ 67,345
General and Administrative Expense [Member]      
Directors and management fees $ 37,500 $ 50,000  
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.19.2
Segment Information (Details Narrative)
3 Months Ended
Mar. 31, 2019
Segment Reporting [Abstract]  
Operating segment description During 2019 and 2018, the Company's operations were in the resource industry in Bulgaria, and Turkey with head offices in the United States and a satellite office in Sofia, Bulgaria. The Company operated a few segments, a head office in Canada, an oil and natural gas operations in Turkey and its oil and natural gas properties are located in Bulgaria.
XML 67 R56.htm IDEA: XBRL DOCUMENT v3.19.2
Segment Information - Schedule of Financial Information for Geographical Segments (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 05, 2018
Mar. 31, 2019
Mar. 31, 2018
Dec. 31, 2018
Oil and gas sales   $ 1,024,784 $ 964,022  
Production   658,453 711,621  
Depletion   151,400 163,049 $ 700,219
Depreciation   12,353 5,348 29,408
Accretion of asset retirement obligation   100,653 84,058 371,526
General and administrative   417,480 420,966  
Total (recovery) expenses   1,340,339 1,385,042  
Income (loss) before other income (expenses)   (315,555) (421,020)  
Interest income   6,447 3,343  
Interest expense   (9,138) (22,183)  
Accretion of operating lease liability   (1,424)  
Foreign exchange gain (loss)   4,730 (7,803)  
Other expense   (77)  
Loss on debt settlement $ 102,500 (102,500)  
Total other income (expense)   538 (129,143)  
Net income (loss)   (315,017) (550,163) $ (2,375,513)
Long Lived Assets   6,641,567 4,163,304  
Bulgaria [Member]        
Oil and gas sales    
Production    
Depletion    
Depreciation    
Accretion of asset retirement obligation    
General and administrative   459 (150)  
Total (recovery) expenses   459 (150)  
Income (loss) before other income (expenses)   (459) 150  
Interest income    
Interest expense    
Accretion of operating lease liability      
Foreign exchange gain (loss)    
Other expense      
Loss on debt settlement      
Total other income (expense)    
Net income (loss)   (459) 150  
Long Lived Assets   3,115,918  
North America [Member]        
Oil and gas sales    
Production    
Depletion    
Depreciation    
Accretion of asset retirement obligation    
General and administrative   160,243 178,344  
Total (recovery) expenses   160,243 178,344  
Income (loss) before other income (expenses)   (160,243) (178,344)  
Interest income    
Interest expense   (9,138) (22,183)  
Accretion of operating lease liability      
Foreign exchange gain (loss)   2,067 2,455  
Other expense      
Loss on debt settlement     (102,500)  
Total other income (expense)   (7,071) (122,228)  
Net income (loss)   (167,314) (300,572)  
Long Lived Assets    
Turkey [Member]        
Oil and gas sales   1,024,784 964,022  
Production   658,453 711,621  
Depletion   151,400 163,049  
Depreciation   12,353 5,348  
Accretion of asset retirement obligation   100,653 84,058  
General and administrative   256,778 242,772  
Total (recovery) expenses   1,179,637 1,206,848  
Income (loss) before other income (expenses)   (154,853) (242,826)  
Interest income   6,447 3,343  
Interest expense    
Accretion of operating lease liability   (1,424)    
Foreign exchange gain (loss)   2,663 (10,258)  
Other expense   (77)    
Loss on debt settlement      
Total other income (expense)   7,609 (6,915)  
Net income (loss)   (147,244) (249,741)  
Long Lived Assets   $ 3,525,649 $ 4,163,304  
XML 68 R57.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes (Details Narrative)
3 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income tax rate 21.00%
XML 69 R58.htm IDEA: XBRL DOCUMENT v3.19.2
Income Taxes - Schedule of Reconciliation of Provision for Income Taxes (Details) - USD ($)
3 Months Ended
Mar. 31, 2019
Mar. 31, 2018
Income Tax Disclosure [Abstract]    
Benefit at statutory rate $ (66,154) $ (115,534)
Permanent differences and other:
Valuation allowance change 66,154 115,534
Income tax provision
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