Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

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

$20.5

million for the

three

months ended

March 31, 2020,

compared to

$7.3

million for the

three

months ended

March 31, 2019.

$12.4

million of this higher

first

quarter loss was a

one

-time non-cash charge, reflecting the excess of the fair value of the new preferred stock issued over the historical book value of the related convertible debt retired pursuant to Conversion and Exchange Agreements. (see Note

– “Long-Term Debt”). The Company had working capital of

$6.7

million at

March 31, 2020

and used cash in its operations of

$4.4

million for the

three

months ended

March 31, 2020.

Cash requirements during the

three

months ended

March 31, 2020

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”). The Company completed the offering during

March 2020,

having issued a total of

2,369,170

shares of common stock in the

November 2018

ATM Offering for gross proceeds of

$25

million and aggregate net proceeds of approximately

$24.2

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, 2020,

the Company was in compliance with its debt covenants. Additionally, the Company entered into an agreement with Apollo that allows the Company to extend the maturity of the Apollo debt for an additional year from its current contractual maturity of

May 2021

May 2022

at the Company’s option. (see Note

– “Long-Term Debt”).

March 5, 2020,

the Company entered into Conversion and Exchange Agreements (the “Exchange Agreements”) with certain holders (the “Holders”) of the Company’s

Convertible Senior Notes due

2020

(the “Convertible Notes”) having an aggregate original principal amount of

$27.4

million. Pursuant to the terms of the Exchange Agreements, the Holders exchanged an aggregate amount payable of

$27.3

million under the Convertible Notes for an aggregate of

10,000

shares of Series

Preferred Stock and the Holders converted the remaining aggregate amount payable of

$17.5

million of Convertible Notes into

2.6

million shares of common stock in accordance with the terms of the existing Indenture. Following the transactions, all of the Convertible Notes held by the Holders, as well as all the remaining Convertible Notes held by others that were converted in accordance with the existing Indenture at maturity have been satisfied in full and cancelled.

The Company’s acquisition of a

124

-mile extension of its Northern Pipeline will require a

$19

million payment within

180

days 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, 2020,

approximately

$355

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

other principal 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, 2020,

approximately

$38.9

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

5,766,337

shares of common stock were issued to the lenders. This conversion activity represents a non-cash financing activity. Pursuant to the terms of Conversion and Exchange Agreements, as discussed above, approximately

$27.3

million of Convertible Notes were exchanged for an aggregate of

10,000

shares of Series

Preferred Stock.

March 31, 2020,

accruals for purchases of PP&E received was

$516

thousand, and are expected to be paid in the

second

fiscal quarter of

2020.

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, 2020		December 31, 2019		March 31, 2019
(in thousands)

Cash and Cash Equivalents	$	10,518	$	15,682	$	16,235
Restricted Cash included in Other Assets		134		134		133
Cash, Cash Equivalents and Restricted Cash in the Consolidated Statement of Cash Flows	$	10,652	$	15,816	$	16,368

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

December 2019,

FASB issued an accounting standards update which reduces complexity in accounting standards by removing certain exceptions to the general principles in Topic

740.

This update is effective for fiscal years beginning after

December 15, 2021,

and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing this new guidance and expects this new standard will

not

have a material impact on the consolidated financial statements.

June 2016,

FASB issued an accounting standards update which introduces new guidance for the accounting for credit losses on certain financial instruments. This update is effective for fiscal years beginning after

December 15, 2023,

and for interim periods within those fiscal years, with early adoption permitted. The Company is currently assessing this new guidance and expects this new standard will

not

have a material impact on the consolidated financial statements.

Accounting Guidance 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 adopted this guidance on

January 1, 2020.

The adoption of this update modified our disclosures, but had

impact on the Company’s condensed consolidated financial statements (see Note

– “Fair Value Measurements”).

August 2018,

the FASB issued an accounting standards update on a customer’s accounting for implementation costs incurred in a cloud computing arrangement. 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 adopted this guidance on

January 1, 2020,

and the new standard had

impact on the Company’s condensed consolidated financial statements.