Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Liquidity Accounting Policy Disclosure [Policy Text Block]

Liquidity

The Condensed Consolidated Financial Statements of the Company have been prepared using accounting principles applicable to a going concern, which assumes realization of assets and settlement of liabilities in the normal course of business. The Company incurred losses of

$7.3

million for the

three

months ended

March 31, 2019,

compared to

$6.0

million for the

three

months ended

March 31, 2018.

The Company had working capital of

$13.9

million at

March 31, 2019,

and used cash in its operations of

$4.0

million for the

three

months ended

March 31, 2019.

Cash requirements during the

three

months ended

March 31, 2019

primarily reflect certain administrative costs related to the Company’s water project development efforts. Currently, the Company’s sole focus is the development of its land and water assets.

November 2018,

the Company entered into an At Market Issuance Sales Agreement under which the Company could issue and sell shares of its common stock having an aggregate offering price of up to

$25

million from time to time in an “at-the-market” offering (the

“November 2018

ATM Offering”). As of

March 31, 2019,

the Company issued

879,920

shares of common stock in the

November 2018

ATM Offering for gross proceeds of

$9.14

million and aggregate net proceeds of approximately

$8.81

million. The Company has and

may

continue to issue equity securities pursuant to the

November 2018

ATM Offering.

March 2018,

the Company entered into an At Market Issuance Sales Agreement under which the Company could issue and sell shares of its common stock having an aggregate offering price of up to

$15

million from time to time in an “at the market” offering (the

“March 2018

ATM Offering”). The Company completed the offering during

May 2018,

having issued

1,159,718

shares of common stock in the

March 2018

ATM Offering for gross proceeds of

$15

million and aggregate net proceeds of approximately

$14.6

million.

May 2017,

the Company entered into a new

$60

million credit agreement (“Credit Agreement”) with funds affiliated with Apollo Global Management, LLC (“Apollo”) that replaced and refinanced its then existing

$45

million senior secured mortgage debt (“Prior Senior Secured Debt”) and provided

$15

million of new senior debt to fund immediate construction related expenditures (“Senior Secured Debt”). The Company’s Senior Secured Debt and its convertible notes contain representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another person. However, while there are affirmative covenants, there are

financial maintenance covenants and

restrictions on the Company’s ability to issue additional common stock to fund future working capital needs. The debt covenants associated with the Senior Secured Debt were negotiated by the parties with a view towards the Company’s operating and financial condition as it existed at the time the agreements were executed. At

March 31, 2019,

the Company was in compliance with its debt covenants.

As of

March 31, 2019,

the Company had principal and interest payments aggregating approximately

$76.3

million coming due in

March 2020

related to its

7.00%

Convertible Senior Notes (“Convertible Senior Notes”) to the extent the noteholders, who have the right to convert at any time into the Company’s common stock at a conversion rate of

$6.75

per share, do

not

convert prior to

March 2020

or the Company does

not

exercise the option agreements it currently has with parties holding

99%

of its Convertible Senior Notes that allow the Company, at its sole option, at any time prior to

December 5, 2019,

to extend the maturity date of the Convertible Senior Notes to

September 5, 2021.

Additionally, the Company’s Senior Secured Debt of approximately

$67.1

million as of

March 31, 2019,

could also become due as early as

December 2019,

if the Company has

not

exercised the option agreements or the Convertible Senior Notes have

not

been converted by that time and the Company’s stock price is less than

120%

of the conversion rate and according to additional terms of the debt agreement. Specifically, the Springing Maturity Date is

not

applicable if less than

$10

million of original, outstanding principal related to the Convertible Senior Notes is outstanding at that time. Further, the Company’s option to acquire an additional

124

-mile extension of its’ Northern Pipeline will require an

$18

million payment upon completion of certain conditions precedent under the purchase agreement with El Paso Natural Gas Company (“EPNG”). If the acquisition of the

124

-mile segment is

not

completed, then the Company’s Northern Pipeline opportunities will be limited to the

-mile segment it already owns. The Company

may

meet its debt and working capital requirements through a variety of means, including extension, refinancing, equity placements, the sale or other disposition of assets, or reductions in operating costs.

Limitations on the Company’s liquidity and ability to raise capital

may

adversely affect it. Sufficient liquidity is critical to meet the Company’s resource development activities. Although the Company currently expects its sources of capital to be sufficient to meet its near-term liquidity needs, there can be

assurance that its liquidity requirements will continue to be satisfied. If the Company cannot raise needed funds, it might be forced to make substantial reductions in its operating expenses, which could adversely affect its ability to implement its current business plan and ultimately its viability as a company.

Cash Flow Supplemental [Policy Text Block]

Supplemental Cash Flow Information

Under the terms of the Senior Secured Debt, the Company is required to pay

25%

of all future quarterly interest payments in cash. During the

three

months ended

March 31, 2019,

approximately

$330

thousand in interest payments on the corporate secured debt was paid in cash.

other payments are due on the Senior Secured Debt or the Company’s convertible notes prior to their maturities.

During the

three

months ended

March 31, 2019,

approximately

$3.06

million in convertible notes were converted by certain of the Company’s lenders. As a result,

485,020

shares of common stock were issued to the lenders. This conversion activity represents a non-cash financing activity.

The balance of cash, cash equivalents, and restricted cash as shown in the condensed consolidated statements of cash flows is comprised of the following:

Cash, Cash Equivalents and Restricted Cash	March 31, 201 9		December 31, 201 8		March 31, 201 8
(in thousands)

Cash and Cash Equivalents	$	16,235	$	12,558	$	8,577
Restricted Cash included in Other Assets		133		133		133
Cash, Cash Equivalents and Restricted Cash in the Consolidated Statement of Cash Flows	$	16,368	$	12,691	$	8,710

The restricted cash amounts included in Other Assets primarily represent a deposit from a water project participant related to a cost-sharing agreement.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Accounting Guidance

Not

Yet Adopted

August 2018,

the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which modifies the disclosure requirements for fair value measurements. This update is effective for fiscal years beginning after

December 15, 2019,

and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing the impact this guidance will have on its consolidated financial statements.

Accounting Guidance Adopted

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

02,

Leases (“Topic

842”

), which supersedes the existing guidance for lease accounting (“Topic

840”

). The new standard requires lessees to recognize leases on their balance sheets, and leaves lessor accounting largely unchanged. The Company adopted the provisions of Topic

842

January 1, 2019,

using the modified retrospective approach and the option presented under ASU

2018

to transition only active leases as of

January 1, 2019,

with a cumulative effect adjustment as of that date. All comparative periods prior to

January 1, 2019,

retain the financial reporting and disclosure requirements of Topic

840.

The Company elected to utilize the transition package of practical expedients permitted within the new standard, which among other things, allowed the Company to carryforward the historical lease classification. The Company made an accounting policy election that will keep leases with an initial term of

months or less off the Company’s Consolidated Balance Sheets which resulted in recognizing those lease payments in the Consolidated Statements of Operations and Comprehensive Loss on a straight-line basis over the lease term. The Company did

not

elect the hindsight practical expedient when determining the lease terms.

The adoption of the new standard resulted in the recording of additional net right-of-use assets and corresponding lease liabilities of approximately

$151

thousand and

$100

thousand, respectively, as of

January 1, 2019.

The difference between the right-of-use assets and the lease liabilities was recorded to eliminate existing accrued rent balances recorded under Topic

840.

The adoption of the new standard did

not

impact the Company’s consolidated net earnings and had

impact on cash flows.

June 2018,

the FASB issued an accounting standards update which simplifies the accounting for share-based payments granted to nonemployees for goods and services. This update is effective for fiscal years beginning after

December 15, 2018,

and for interim periods within those fiscal years. The Company adopted this guidance on

January 1, 2019,

and the new standard had

impact on the Company’s condensed consolidated financial statements.

July 2017,

the FASB issued an accounting standards update to provide new guidance for the classification analysis of certain equity-linked financial instruments, or embedded features, with down round features, as well as clarify existing disclosure requirements for equity-classified instruments. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The Company adopted this guidance on

January 1, 2019.

As a result, the Company reclassified a warrant liability in the amount of

$865

thousand to additional paid-in capital, as the Company’s Warrant

longer met the definition of a derivative. In addition, during the years ended

December 31, 2018

and

2017,

the Company recognized annual gains of

$1.5

million and

$0.5

million, respectively, related to the historical remeasurement of the warrant derivative liability at fair value. Upon adoption of this guidance as of

January 1, 2019,

the Company recorded

$2.0

million in additional paid-in capital with a corresponding adjustment to the opening balance of accumulated deficit related to these previously recorded gains.