10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q/A

(Amendment No. 1)

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

For the quarterly period ended September 30, 2016

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

For the transition period from                             to

Commission File Number: 001-32989

Yuma Energy, Inc.

(Exact name of registrant as specified in its charter)

CALIFORNIA (State or other jurisdiction of incorporation) 94-0787340 (IRS Employer Identification No.)

1177 West Loop South, Suite 1825 Houston, Texas (Address of principal executive offices) 77027 (Zip Code)

(713) 968-7000

(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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) 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 file, an accelerated file, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated file,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Larger accelerated filer [ ]                                                                                      Accelerated filer [ ]

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

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

At October 25, 2016, 3,775,636 shares of the registrant’s common stock, no par value, were outstanding.

Explanatory Note

The purpose of the Amendment No. 1 on Form 10–Q/A to Yuma Energy, Inc. quarterly report of Form 10–Q for the quarter ended September 30, 2016, filed with the Securities and Exchange Commission on November 14, 2016 (the “Form 10–Q”), is solely to furnish Exhibit 101 to the Form 10–Q in accordance with Rule 405 of Regulation S–T. Due to a technical error, the eXtensible Business Reporting Language (“XBRL”) data associated with the Form 10-Q was omitted from that filing.

No other changes have been made to the Form 10–Q. This Amendment No. 1 speaks as of the original filing date of the Form 10–Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10–Q.

Item 6.   Exhibits.

EXHIBIT INDEX

FOR

Form 10-Q for the quarter ended September 30, 2016.
		Incorporated by Reference
Exhibit No.	Description	Form	SEC File No.	Exhibit	Filing Date	Filed Herewith	Furnished Herewith
31.1	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.					X
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.					X
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.						X
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.						X
101.INS	XBRL Instance Document.					X
101.SCH	XBRL Schema Document.					X
101.CAL	XBRL Calculation Linkbase Document.					X
101.DEF	XBRL Definition Linkbase Document.					X
101.LAB	XBRL Label Linkbase Document.					X
101.PRE	XBRL Presentation Linkbase Document.					X

39

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.

	YUMA ENERGY, INC.
	By:	/s/ Sam L. Banks
	Name:	Sam L. Banks
Date: November 15, 2016	Title:	President and Chief Executive Officer (Principal Executive Officer)
	By:	/s/ James J. Jacobs
Date: November 15, 2016	Name:	James J. Jacobs
	Title:	Chief Financial Officer (Principal Financial Officer)

  40

EX-31.1

Exhibit 31.1

Certification

I, Sam L. Banks, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q/A of Yuma Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

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

4.

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

a.

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

b.

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

c.

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

d.

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

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of 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.

/s/ Sam L. Banks

Sam L. Banks

Principal Executive Officer

November 15, 2016

EX-31.2

Exhibit 31.2

Certification

I, James J. Jacobs, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q/A of Yuma Energy, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

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

4.

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

a.

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

b.

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

c.

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

d.

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

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of 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.

/s/ James J. Jacobs

James J. Jacobs

Principal Financial Officer

November 15, 2016

EX-32.1

Exhibit 32.1

Section 1350 Certification

In connection with the Quarterly Report on Form 10-Q/A of Yuma Energy, Inc. (the “Company”) for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sam L. Banks, 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:

1. 

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. 

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Sam L. Banks

Sam L. Banks

President and Chief Executive Officer

November 15, 2016

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Section 1350 Certification

I, James J. Jacobs, certify that:

In connection with the Quarterly Report on Form 10-Q/A of Yuma Energy, Inc. (the “Company”) for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James J. Jacobs, 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:

1. 

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. 

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ James J. Jacobs

James J. Jacobs

Chief Financial Officer

November 15, 2016

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to, and will be retained by, the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 25, 2016
Document And Entity Information
Entity Registrant Name	Yuma Energy, Inc.
Entity Central Index Key	0000081318
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,775,636
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2016

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 1,831,928	$ 5,355,191
Accounts receivable, net of allowance for doubtful accounts:
Trade	2,942,948	2,829,266
Officers and employees	65,153	75,404
Other	338,461	633,573
Commodity derivative instruments	1,016,583	2,658,047
Prepayments	321,237	704,523
Other deferred charges	29,921	415,740
Total current assets	6,546,231	12,671,744
OIL AND GAS PROPERTIES (full cost method):
Not subject to amortization	15,336,916	14,288,716
Subject to amortization	205,331,835	204,512,038
Subtotal	220,668,751	218,800,754
Less: accumulated depreciation, depletion and amortization	(134,312,088)	(117,304,945)
Net oil and gas properties	86,356,663	101,495,809
OTHER PROPERTY AND EQUIPMENT:
Land, buildings and improvements	2,795,000	2,795,000
Other property and equipment	3,497,948	3,460,507
Total	6,292,948	6,255,507
Less: accumulated depreciation and amortization	(2,361,010)	(2,174,316)
Net other property and equipment	3,931,938	4,081,191
OTHER ASSETS AND DEFERRED CHARGES:
Commodity derivative instruments	177,724	1,070,541
Deposits	414,064	264,064
Other noncurrent assets	0	38,104
Total other assets and deferred charges	591,788	1,372,709
TOTAL ASSETS	97,426,620	119,621,453
CURRENT LIABILITIES:
Current maturities of debt	29,800,000	30,063,635
Accounts payable, principally trade	6,378,942	7,933,664
Commodity derivative instruments	74,331	0
Asset retirement obligations	243,711	70,000
Other accrued liabilities	2,593,813	1,781,484
Total current liabilities	39,090,797	39,848,783
OTHER NONCURRENT LIABILITIES:
Asset retirement obligations	8,571,895	8,720,498
Commodity derivative instruments	4,432	0
Deferred taxes	144,700	1,417,364
Other liabilities	7,467	30,090
Total other noncurrent liabilities	8,728,494	10,167,952
EQUITY:
Preferred stock	10,828,603	10,828,603
Common stock, no par value (300 million shares authorized, 3,628,991 and 3,591,731 issued)	142,724,775	141,858,946
Accumulated other comprehensive income (loss)	0	0
Accumulated earnings (deficit)	(103,946,049)	(83,082,831)
Total equity	49,607,329	69,604,718
TOTAL LIABILITIES AND EQUITY	$ 97,426,620	$ 119,621,453

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common Stock, No Par Value (in dollars per share)	$ 0.00	$ 0.00
Common stock, shares authorized	300,000,000	300,000,000
Common Stock, shares, Issued	3,628,991	3,591,731

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
REVENUES:
Sales of natural gas and crude oil	$ 3,151,626	$ 4,649,009	$ 9,207,636	$ 14,756,582
Net gains (losses) from commodity derivatives	447,936	3,893,650	(407,828)	3,267,239
Total revenues	3,599,562	8,542,659	8,799,808	18,023,821
EXPENSES:
Lease operating	1,798,868	2,718,919	5,692,077	9,168,260
Re-engineering and workovers	132,708	1,136	132,708	555,628
Marketing cost of sales	0	234,507	0	434,189
General and administrative - stock-based compensation	189,211	338,619	909,309	2,210,950
General and administrative - other	1,581,619	1,873,484	5,742,824	5,389,859
Depreciation, depletion and amortization	1,711,043	3,123,812	6,178,248	11,020,278
Asset retirement obligation accretion expense	107,760	170,209	318,016	499,766
Impairments	0	0	11,015,589	4,927,508
Other	6,612	(274,329)	(10,173)	444,320
Total expenses	5,527,821	8,186,357	29,978,598	34,650,758
INCOME (LOSS) FROM OPERATIONS	(1,928,259)	356,302	(21,178,790)	(16,626,937)
OTHER INCOME (EXPENSE):
Interest expense	(245,359)	(131,114)	(974,403)	(337,499)
Other, net	10,745	14,055	17,311	35,521
Total other income (expense)	(234,614)	(117,059)	(957,092)	(301,978)
NET INCOME (LOSS) BEFORE INCOME TAXES	(2,162,873)	239,243	(22,135,882)	(16,928,915)
Income tax expense (benefit)	(47,429)	329,653	(1,272,664)	(3,605,839)
NET INCOME (LOSS)	(2,115,444)	(90,410)	(20,863,218)	(13,323,076)
PREFERRED STOCK:
Dividends paid in cash, perpetual preferred Series A	0	320,626	0	940,315
Dividends in arrears, perpetual preferred Series A	320,625	0	961,877	0
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (2,436,069)	$ (411,036)	$ (21,825,095)	$ (14,263,391)
EARNINGS (LOSS) PER COMMON SHARE ADJUSTED FOR OCTOBER 26,2016 1-FOR-20 REVERSE STOCK SPLIT:
Basic	$ (0.67)	$ (0.11)	$ (6.04)	$ (4.03)
Diluted	$ (0.67)	$ (0.11)	$ (6.04)	$ (4.03)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING ADJUSTED FOR OCTOBER 26, 2016 1-FOR-20 REVERSE STOCK SPLIT:
Basic	3,628,683	3,580,163	3,611,241	3,539,755
Diluted	3,628,683	3,580,163	3,611,241	3,539,755

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Consolidated Statements Of Comprehensive Income Loss
NET INCOME (LOSS)	$ (2,115,444)	$ (90,410)	$ (20,863,218)	$ (13,323,076)
OTHER COMPREHENSIVE INCOME (LOSS):
Commodity derivatives sold	0	0	0	(119,917)
Less income taxes	0	0	0	(46,168)
Commodity derivatives sold, net of income taxes	0	0	0	(73,749)
Reclassification of loss on settled commodity derivatives	0	9,971	0	41,525
Less income taxes	0	3,839	0	15,987
Reclassification of loss on settled commodity derivatives, net of income taxes	0	6,132	0	25,538
OTHER COMPREHENSIVE INCOME (LOSS)	0	6,132	0	(48,211)
COMPREHENSIVE LOSS	$ (2,115,444)	$ (84,278)	$ (20,863,218)	$ (13,371,287)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($)	PERPETUAL PREFERRED STOCK	COMMON STOCK, NO PAR VALUE:	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS):	ACCUMULATED EARNINGS (DEFICIT):	Total
Beginning Balance, Amount at Dec. 31, 2014	$ 9,958,217	$ 137,469,772	$ 38,801	$ (67,195,800)	$ 80,270,990
Beginning Balance, Shares at Dec. 31, 2014	507,739	3,456,993
Sales of stock, Amount	$ 870,386	$ 1,363,160			2,233,546
Sales of stock, shares	46,857	67,373
Restricted stock awards vested, Amount		$ 3,171,477			3,171,477
Restricted stock awards vested, Shares		83,806
Buy back of shares from vested stock awards, Amount		$ (300,732)			(300,732)
Buy back shares from vested stock awards, Shares		(16,441)
Stock appreciation rights issued, not vested		$ 155,269			155,269
Comprehensive income (loss) from commodity derivative instruments, net of income taxes			(38,801)		(38,801)
Series A perpetual preferred stock cash dividends				(1,047,191)	(1,047,191)
Net loss				(14,839,840)	(14,839,840)
Ending Balance, Amount at Dec. 31, 2015	$ 10,828,603	$ 141,858,946	0	(83,082,831)	69,604,718
Ending Balance, Shares at Dec. 31, 2015	554,596	3,591,731
Restricted stock awards vested, Amount		$ 725,573			725,573
Restricted stock awards vested, Shares		51,929
Buy back of shares from vested stock awards, Amount		$ (74,422)			(74,422)
Buy back shares from vested stock awards, Shares		(14,669)
Stock appreciation rights issued, not vested		$ 214,678			214,678
Net loss				(20,863,218)	(20,863,218)
Ending Balance, Amount at Sep. 30, 2016	$ 10,828,603	$ 142,724,775	$ 0	$ (103,946,049)	$ 49,607,329
Ending Balance, Shares at Sep. 30, 2016	554,596	3,628,991

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Reconciliation of net loss to net cash provided by (used in) operating activities
Net loss	$ (20,863,218)	$ (13,323,076)
Impairment of oil and gas properties	11,015,589	0
Impairment of goodwill	0	4,927,508
Depreciation, depletion and amortization of property and equipment	6,178,248	11,020,278
Accretion of asset retirement obligation	318,016	499,766
Stock-based compensation net of capitalized cost	909,309	2,210,950
Amortization of other assets and liabilities	518,478	209,904
Deferred tax expense (benefit)	(1,272,664)	(3,608,239)
Bad debt expense increase (decrease)	(10,173)	787,264
Unrealized losses on commodity derivatives	2,613,044	1,847,371
Other	0	(342,944)
Changes in current operating assets and liabilities:
Accounts receivable	201,854	4,411,640
Other current assets	383,286	(77,453)
Accounts payable	(1,471,397)	(13,938,649)
Other current liabilities	783,551	1,095,356
Other noncurrent assets and liabilities	(108,618)	0
NET CASH USED IN OPERATING ACTIVITIES	(804,695)	(4,280,324)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on property and equipment	(2,588,455)	(11,211,634)
Proceeds from sale of property	340,603	30,442
Decrease in short-term investments	0	1,170,868
NET CASH USED IN INVESTING ACTIVITIES	(2,247,852)	(10,010,324)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in borrowing on line of credit	0	6,800,000
Proceeds from insurance note	0	813,562
Payments on insurance note	(263,635)	(579,005)
Line of credit financing costs	(132,659)	(215,141)
Net proceeds from sale of common stock	0	1,363,160
Net proceeds from sale of perpetual preferred stock	0	870,386
Cash dividends to preferred shareholders	0	(940,315)
Common stock purchased from employees	(74,422)	(300,732)
Other	0	(31,485)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(470,716)	7,780,430
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,523,263)	(6,510,218)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	5,355,191	11,558,322
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,831,928	5,048,104
Supplemental disclosure of cash flow information:
Interest payments (net of interest capitalized)	354,344	73,342
Interest capitalized	395,244	750,107
Supplemental disclosure of significant non-cash activity:
(Increase) decrease in capital expenditures financed by accounts payable	$ 83,325	$ 2,979,301

XML

1. BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

1. BASIS OF PRESENTATION

These consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments necessary for a fair presentation of the results for the periods reported. All such adjustments are of a normal recurring nature unless disclosed otherwise. The notes to the consolidated financial statements have been condensed and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended December 31, 2015 and the notes thereto included with the Annual Report on Form 10-K/A of Yuma Energy, Inc., a California corporation (the “Company”) filed with the Securities and Exchange Commission (“SEC”) on May 23, 2016.

On October 26, 2016, the shareholders of the Company approved, among other proposals, (i) the conversion (the “Series A Conversion”) of the 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share of the Company (the “Series A Preferred Stock”), into common stock, no par value per share of the Company (the “common stock”), at a rate of 35 shares of common stock for each share of Series A Preferred Stock; (ii) the reincorporation of the Company from California to Delaware pursuant to a merger (the “Reincorporation Merger”) of the Company with and into Yuma Energy, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Yuma Delaware”); and (iii) the merger (the “Merger”) of Yuma Merger Subsidiary, Inc., a Delaware corporation and wholly owned subsidiary of Yuma Delaware (“Merger Subsidiary”), with and into Davis Petroleum Acquisition Corp., a Delaware corporation (“Davis”) with Davis surviving as a wholly owned subsidiary of Yuma Delaware. The Company issued approximately 19,411,000 shares of common stock as a result of the Series A Conversion. Immediately following the Series A Conversion, each share of common stock was exchanged for one-twentieth of one share of common stock, $0.001 par value per share of Yuma Delaware (the “Yuma Delaware Common Stock”) as part of the Reincorporation Merger. The shares outstanding presented in this quarterly report on Form 10-Q have been retroactively adjusted to account for the 1-for-20 reverse stock split. See Note 15 – Subsequent Events, for a discussion of the Reincorporation Merger and the Merger.

Restatement Background

On May 11, 2016, the Company determined that there were non-cash errors in the computation of its income tax provision and the recording of its deferred taxes related to its asset retirement obligations, its stock based compensation, its allocation of the purchase price in the Pyramid merger and resultant amount of goodwill, the tax amortization of that goodwill, the tax treatment of expenses related to the Pyramid merger, the incorrect roll forward of the historic net operating losses and the difference in the book and tax basis in its properties. As a result, the Company’s computation of its income tax provision and the net amount of its deferred tax liability were restated for the years ended December 31, 2015, 2014 and 2013 and the applicable quarterly periods in 2015 and 2014.

As a result, management, the Audit Committee and the Board of Directors determined after consideration of the relevant facts and circumstances, that the Company’s consolidated financial statements as of December 31, 2015 and 2014, and for the years ended December 31, 2015, 2014 and 2013 contained within the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Form 10-K”), and the financial data included in its interim consolidated financial statements set forth in its quarterly reports on Form 10-Q for the quarter ended September 30, 2014, and for all subsequent quarters through the quarter ended December 31, 2015, should be restated, and that such financial statements previously filed with the SEC, should no longer be relied upon.

As a result, on May 23, 2016, the Company filed Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2015 (the “Amended Filing”). Prior period financial information in this Form 10-Q has been amended where necessary to reflect the restatement. Additional information regarding the restatement is contained in the Amended Filing. Therefore, this Form 10-Q should be read in conjunction with the Amended Filing.

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2. LIQUIDITY CONSIDERATIONS AND GOING CONCERN

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

2. LIQUIDITY CONSIDERATIONS AND GOING CONCERN

The Company has borrowings which require, among other things, compliance with certain financial ratios. Due to operating losses the Company has sustained during recent quarters as a result of the prolonged weak commodity price environment and other factors, the Company was not in compliance with the trailing four quarter funded debt to EBITDA financial ratio covenant under its credit facility at September 30, 2015, December 31, 2015, March 31, 2016, June 30, 2016 and September 30, 2016, its current ratio as of June 30, 2016 and September 30, 2016, as well as its EBITDA to interest expense ratio as of December 31, 2015, March 31, 2016, June 30, 2016 and September 30, 2016. In addition, the Company was not in compliance due to its going concern opinion at March 31, 2016 and June 30,2016 , as well as its failure to maintain a certain financial bank as its principal depository bank. On May 20, 2016, the Company remedied its compliance with regard to the depository bank. On December 30, 2015, the Company’s wholly owned subsidiary, Yuma Exploration and Production Company, Inc. (“Exploration”) entered into the Waiver, Borrowing Base Redetermination and Ninth Amendment (the “Ninth Amendment”) to the credit agreement which provided for a $29.8 million conforming borrowing base, with an automatic reduction to $20.0 million on May 31, 2016, and waived the compliance with the trailing four quarter funded debt to EBITDA and EBITDA to interest expense financial ratio covenants or any other events of default under the credit facility for the quarters ended September 30, 2015 and December 31, 2015. On June 6, 2016 and effective as of May 31, 2016, Exploration entered into the Waiver and Tenth Amendment to the credit agreement as amended by the Waiver and Amendment to the Waiver and Tenth Amendment dated August 25, 2016 (the “Tenth Amendment”), which maintained the borrowing base at $29.8 million and automatically reduced the borrowing base to $20.0 million on the earliest of (i) September 23, 2016, if the registration statement on Form S-4 (the “Form S-4”) filed with the SEC pursuant to the pending Merger Agreement had not been declared effective by such date; (ii) the date that was forty-seven days after the date the Form S-4 had been declared effective by the SEC; (iii) October 31, 2016; and (iv) in the event of the termination of the merger agreement. As of September 30, 2016, the Company had a working capital deficit of $32.5 million inclusive of the Company’s outstanding debt under its credit facility, which was fully drawn with no additional borrowing capacity available.

Upon the closing of the Merger discussed in Note 15 – Subsequent Events, the outstanding balance under the credit facility was assumed by Yuma Delaware in a new credit facility. Under the new credit facility, which was entered into in connection with the Merger, Yuma Delaware is in compliance with the credit facility. This new credit facility supersedes the Company’s previous credit agreement and non-compliance matters discussed above.

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3. ACCOUNTING STANDARDS

9 Months Ended

Sep. 30, 2016

Accounting Standards

3. ACCOUNTING STANDARDS

Not Yet Adopted

In October 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory,” which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a modified retrospective approach, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash flows. This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a retrospective approach if practicable, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its Consolidated Statement of Cash Flows.

In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,” which seeks to simplify accounting for share-based payment transactions including income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard requires the Company to recognize the income tax effects of awards in the income statement when the awards vest or are settled. The guidance is effective for fiscal years beginning after December 15, 2016. Early adoption is permitted and if an entity early adopts the guidance in an interim period, any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.

In February 2016, the FASB issued ASU 2016-02, “Leases,” a new lease standard requiring lessees to recognize lease assets and lease liabilities for most leases classified as operating leases under previous GAAP. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact of adopting this standard on its Consolidated Financial Statements.

In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which changes certain guidance related to the recognition, measurement, presentation and disclosure of financial instruments. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted for the majority of the update, but is permitted for two of its provisions. The Company is evaluating the new guidance and has not determined the impact this standard may have on its Consolidated Financial Statements.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” an update which removes inconsistencies in existing standards, changes the way companies recognize revenue from contracts with customers, and increases disclosure requirements. The guidance requires companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration to which the company expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued guidance which provides further clarification on the principal versus agent evaluation. The guidance is effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company is currently evaluating the level of effort needed to implement the standard, the impact of adopting this standard on its Consolidated Financial Statements, and whether to use the full retrospective approach or the modified retrospective approach.

Recently Adopted

In April 2015, the FASB issued ASU 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs,” an update that requires debt issuance costs to be presented in the balance sheet as a direct reduction from the associated debt liability.  In August 2015, the FASB subsequently issued ASU 2015-15, “Interest – Imputation of Interest (Subtopic 835-30) – Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” a clarification as to the handling of debt issuance costs related to line-of-credit arrangements that allows the presentation of these costs as an asset. The standards update is effective for interim and annual periods beginning after December 15, 2015. The Company has debt costs associated with its line-of-credit only; therefore, this standard had no impact on its Consolidated Financial Statements. These costs remain an asset on the Company’s Balance Sheet.

In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810) – Amendments to the Consolidation Analysis,” an amendment to the guidance for determining whether an entity is a variable interest entity (“VIE”).  The standard does not add or remove any of the five characteristics that determine if an entity is a VIE.  However, it does change the manner in which a reporting entity assesses one of the characteristics.  In particular, when decision-making over the entity’s most significant activities has been outsourced, the standard changes how a reporting entity assesses if the equity holders at risk lack decision making rights.  This standard is effective for the Company for annual periods beginning after December 15, 2015 and early adoption is permitted, including in interim periods.  The Company adopted this standard’s update, as required, effective January 1, 2016. The adoption of this standard’s update did not have a material impact on its Consolidated Financial Statements.

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4. FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

4. FAIR VALUE MEASUREMENTS

Certain financial instruments are reported at fair value on the Consolidated Balance Sheets. Under fair value measurement accounting guidance, fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants, i.e., an exit price. To estimate an exit price, a three-level hierarchy is used. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability, into three levels. The Company uses a market valuation approach based on available inputs and the following methods and assumptions to measure the fair values of its assets and liabilities, which may or may not be observable in the market.

Fair Value of Financial Instruments (other than Commodity Derivatives, see below) – The carrying values of financial instruments, excluding commodity derivatives, comprising current assets and current liabilities approximate fair values due to the short-term maturities of these instruments and are considered Level 1.

Derivatives – The fair values of the Company’s commodity derivatives are considered Level 2 as their fair values are based on third-party pricing models which utilize inputs that are either readily available in the public market, such as natural gas and oil forward curves and discount rates, or can be corroborated from active markets or broker quotes. These values are then compared to the values given by the Company’s counterparties for reasonableness. The Company is able to value the assets and liabilities based on observable market data for similar instruments, which results in the Company using market prices and implied volatility factors related to changes in the forward curves. Derivatives are also subject to the risk that counterparties will be unable to meet their obligations. Because the Company’s commodity derivative counterparty was Société Générale (“SocGen”) at September 30, 2016, the Company considered non-performance risk in the valuation of its derivatives to be minimal.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques, and at least one significant model assumption or input is unobservable.

	Fair value measurements at September 30, 2016
			Significant
	Quoted prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Commodity derivatives – oil	$	-	$	1,194,307	$	-	$	1,194,307
Liabilities:
Commodity derivatives – gas	$	-	$	78,763	$	-	$	78,763

	Fair value measurements at December 31, 2015
			Significant
	Quoted prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Commodity derivatives – oil	$	-	$	3,442,693	$	-	$	3,442,693
Commodity derivatives – gas		-		285,895		-		285,895
Total assets	$	-	$	3,728,588	$	-	$	3,728,588

Derivative instruments listed above include swaps, reverse swaps and three-way collars. For additional information on the Company’s derivative instruments and derivative liabilities, see Note 5 – Commodity Derivative Instruments.

Debt – The Company’s debt is recorded at the carrying amount on its Consolidated Balance Sheets. For further discussion of the Company’s debt, please see Note 9 – Debt and Interest Expense. The carrying amount of floating-rate debt approximates fair value because the interest rates are variable and reflective of market rates.

Asset Retirement Obligations (“AROs”) – The Company estimates the fair value of AROs based on discounted cash flow projections using numerous estimates, assumptions and judgments regarding such factors as the existence of a legal obligation for an ARO, amounts and timing of settlements, the credit-adjusted risk-free rate to be used and inflation rates.

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5. COMMODITY DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

5. COMMODITY DERIVATIVE INSTRUMENTS

Objective and Strategies for Using Commodity Derivative Instruments – In order to mitigate the effect of commodity price uncertainty and enhance the predictability of cash flows relating to the marketing of the Company’s crude oil and natural gas, the Company enters into crude oil and natural gas price commodity derivative instruments with respect to a portion of the Company’s expected production. The commodity derivative instruments used include variable to fixed price commodity swaps, two-way and three-way collars.

While these instruments mitigate the cash flow risk of future reductions in commodity prices, they may also curtail benefits from future increases in commodity prices.

The Company elected to discontinue hedge accounting for all commodity derivative instruments beginning with the 2013 financial year. The balance in other comprehensive income (“OCI”) at year-end 2012 remained in accumulated other comprehensive income (“AOCI”) until the original hedged forecasted transaction occurred. The last of these contracts expired in December 2015 and the Company’s AOCI balance is now zero. No mark-to-market adjustments for commodity derivative contracts are made to AOCI, but instead are recognized in earnings. As a result of discontinuing the application of hedge accounting, the Company’s earnings are potentially more volatile. See Note 4 – Fair Value Measurements for a discussion of methods and assumptions used to estimate the fair values of the Company’s commodity derivative instruments.

Counterparty Credit Risk – Commodity derivative instruments expose the Company to counterparty credit risk. The Company’s commodity derivative instruments are with SocGen whose long-term senior unsecured debt is rated “A” by Standard and Poor’s, “A2” by Moody’s, “A” by Fitch, “A” by R&I and “A(high)” by DBRS. Commodity derivative contracts are executed under master agreements which allow the Company, in the event of default, to elect early termination of all contracts. If the Company chooses to elect early termination, all asset and liability positions would be netted and settled at the time of election.

Commodity derivative instruments open as of September 30, 2016 are provided below. Natural gas prices are New York Mercantile Exchange (“NYMEX”) Henry Hub prices, 2016 crude oil prices are Argus Light Louisiana Sweet (“LLS”), and 2017 crude oil prices are NYMEX West Texas Intermediate (“WTI”).

	2016			2017
	Settlement			Settlement
NATURAL GAS (MMBtu):
Swaps
Volume		105,475			-
Price	$	2.646	*		-
3-way collars
Volume		-			248,023
Ceiling sold price (call)		-		$	3.280	*
Floor purchased price (put)		-		$	2.946	*
Floor sold price (short put)		-		$	2.381	*
CRUDE OIL (Bbls):
Put spread
Volume		31,547			-
Floor purchased price (put)	$	62.27			-
Floor sold price (short put)	$	40.00			-
3-way collars
Volume		10,630			113,029
Ceiling sold price (call)	$	47.15		$	77.00
Floor purchased price (put)	$	40.00		$	60.00
Floor sold price (short put)	$	30.00		$	45.00

*Price is a weighted average

Derivatives for each commodity are netted on the Consolidated Balance Sheets as they are all contracts with the same counterparty. The following table presents the fair value and balance sheet location of each classification of commodity derivative contracts on a gross basis without regard to same-counterparty netting:

	Fair value as of
	September 30,			December 31,
	2016			2015
Asset commodity derivatives:
Current assets	$	1,420,921		$	3,069,115
Noncurrent assets		326,656			1,841,120
		1,747,577			4,910,235
Liability commodity derivatives:
Current liabilities		(478,669	)		(411,068	)
Noncurrent liabilities		(153,364	)		(770,579	)
		(632,033	)		(1,181,647	)
Total commodity derivative instruments	$	1,115,544		$	3,728,588

Sales of natural gas and crude oil on the Consolidated Statements of Operations are comprised of the following:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Sales of natural gas and crude oil	$	3,151,626		$	4,649,009	$	9,207,636		$	14,756,582
Gain realized from sale of commodity
derivatives		-			-		-			4,030,000
Other gains (losses) realized on
commodity derivatives		488,409			432,825		2,205,216			1,084,610
Unrealized gains (losses) on
commodity derivatives		(40,473	)		3,460,825		(2,613,044	)		(1,847,371	)
Total revenue from natural gas and crude oil	$	3,599,562		$	8,542,659	$	8,799,808		$	18,023,821

A reconciliation of the components of accumulated other comprehensive income (loss) in the Consolidated Statements of Changes in Equity is presented below:

	Nine Months Ended				Year Ended
	September 30, 2016				December 31, 2015
	Before tax		After tax		Before tax			After tax
Balance, beginning of period	$	-	$	-	$	63,091		$	38,801
Sale of unexpired contracts previously subject
to hedge accounting rules		-		-		(119,917	)		(73,749	)
Other reclassifications due to expired contracts
previously subject to hedge accounting rules		-		-		56,826			34,948
Balance, end of period	$	-	$	-	$	-		$	-

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6. ASSET IMPAIRMENTS

9 Months Ended

Sep. 30, 2016

Asset Impairments

6. ASSET IMPAIRMENTS

Oil and natural gas prices have remained low in the first three quarters of 2016 and, as a result, the Company recognized a non-cash asset impairment charge of $11,015,589 to write down oil and gas properties for the three months ended June 30, 2016. In addition, the Company recognized a non-cash asset impairment of $4,927,508 to write off goodwill for the three months ended June 30, 2015. The Company did not incur an impairment for the three months ended September 30, 2016.

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7. PREFERRED STOCK

9 Months Ended

Sep. 30, 2016

Preferred stock [Abstract]

7. PREFERRED STOCK

The Company’s shares of 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share, with a liquidation preference of $25.00 per share (the “Series A Preferred Stock”), traded on the NYSE MKT under the symbol “YUMAprA” prior to the Series A Conversion. Holders of the Series A Preferred Stock were entitled to receive, when, as and if declared by the Board of Directors, cumulative dividends at the rate of 9.25% per annum (the dividend rate) based on the liquidation price of $25.00 per share of the Series A Preferred Stock, payable monthly in arrears on each dividend payment date, with the first payment date of December 1, 2014. The Series A Preferred Stock is presented in the permanent equity section of the financial statements. Due to the current depressed commodity price environment, as well as other factors which have adversely affected the Company’s cash flows and liquidity, the monthly dividends on the Series A Preferred Stock were suspended beginning with the month ended November 30, 2015. Pursuant to the Company’s credit facility, the Company was precluded from making dividend payments on its Series A Preferred Stock. The Company’s articles of incorporation as of September 30, 2016 provided that any unpaid dividends will accumulate. While the accumulation did not result in presentation of a liability on the balance sheet, the accumulated dividends were deducted from the Company’s net income (or added to its net loss) in the determination of income (loss) attributable to common shareholders and, as appropriate, the corresponding computation of earnings (loss) per share. As of September 30, 2016, the Company had accumulated a total of $1,175,628 in unpaid preferred stock dividends, attributable to the Series A Preferred Stock. As part of the Reincorporation Merger, the Series A Preferred Stock, including all of the accumulated and unpaid dividends, was converted into common stock. See Note 15 – Subsequent Events for additional information.

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8. EARNINGS (LOSS) PER COMMON SHARE

9 Months Ended

Sep. 30, 2016

EARNINGS (LOSS) PER COMMON SHARE ADJUSTED FOR OCTOBER 26,2016 1-FOR-20 REVERSE STOCK SPLIT:

8. EARNINGS (LOSS) PER COMMON SHARE

Earnings (loss) per common share is computed by dividing earnings or losses attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Potential common stock equivalents are determined using the “if converted” method.

Potentially dilutive securities for the computation of diluted weighted average shares outstanding (adjusted for the 1-for-20 reverse stock split as described in Note 15 – Subsequent Events) are as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Restricted Stock Awards		74,261		78,716		99,315		68,691
Restricted Stock Units		-		4,771		-		4,771
		74,261		83,487		99,315		73,462

For the three months ended September 30, 2016 and the three months ended September 30, 2015, adjusted earnings were losses, therefore common stock equivalents were excluded from the calculation of diluted net loss per share of common stock, as their effect was anti-dilutive. RSUs were settled in cash during April 2016 and are therefore no longer potentially dilutive.

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9. DEBT AND INTEREST EXPENSE

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

9. DEBT AND INTEREST EXPENSE

	September 30,			December 31,
	2016			2015
Variable rate revolving credit agreement payable to Société Générale,
CIT Bank, NAC, and LegacyTexas Bank, maturing October 31, 2017,
secured by the stock of Exploration and its interest in POL, and
guaranteed by The Yuma Companies, Inc.	$	29,800,000		$	29,800,000
Installment loan due February 29, 2016, originating from the
financing of insurance premiums at 3.74% interest rate.		-			108,894
Installment loan due June 11, 2016, originating from the
financing of insurance premiums at 3.76% interest rate.		-			154,741
		29,800,000			30,063,635
Less: current portion		(29,800,000	)		(30,063,635	)
Total long-term debt	$	-		$	-

The Company has borrowings which require, among other things, compliance with certain financial ratios. Due to operating losses the Company has sustained during recent quarters as a result of the prolonged weak commodity price environment and other factors, the Company was not in compliance with the trailing four quarter funded debt to EBITDA financial ratio covenant under its credit facility at September 30, 2015, December 31, 2015, March 31, 2016, June 30, 2016 and September 30, 2016, its current ratio as of June 30, 2016 and September 30, 2016, as well as its EBITDA to interest expense ratio as of December 31, 2015, March 31, 2016, June 30, 2016 and September 30, 2016. In addition, the Company was not in compliance due to its going concern opinion at March 31, 2016 and June 30, 2016, as well as its failure to maintain a certain financial bank as its principal depository bank. On May 20, 2016, the Company remedied its compliance with regard to the depository bank. On December 30, 2015, Exploration entered into the Ninth Amendment to the credit agreement which provided for a $29.8 million conforming borrowing base, with an automatic reduction to $20.0 million on May 31, 2016, and waived the compliance with the trailing four quarter funded debt to EBITDA and EBITDA to interest expense financial ratio covenants or any other events of default under the credit facility for the quarters ended September 30, 2015 and December 31, 2015. On June 6, 2016 and effective as of May 31, 2016, Exploration entered into the Tenth Amendment as amended on August 25, 2016,, which maintained the borrowing base at $29.8 million and automatically reduced the borrowing base to $20.0 million on the earliest of (i) September 23, 2016, if the Form S-4 filed with the SEC pursuant to the pending Merger Agreement had not been declared effective by such date; (ii) the date that was forty-seven days after the date the Form S-4 had been declared effective by the SEC; (iii) October 31, 2016; and (iv) in the event of the termination of the merger agreement. As of September 30, 2016, the Company had a working capital deficit of $32.5 million inclusive of the Company’s outstanding debt under its credit facility, which was fully drawn with no additional borrowing capacity available.

Upon the closing of the Merger discussed in Note 15 – Subsequent Events, the outstanding balance under the credit facility was assumed by Yuma Delaware in a new credit facility. Under the new credit facility, which was entered into in connection with the Merger, Yuma Delaware is in compliance with the credit facility. This new credit facility supersedes the Company’s previous credit agreement and non-compliance matters discussed above.

The following summarizes interest expense for the three and nine months ended September 30, 2016 and 2015.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Credit agreement	$	323,735		$	314,177		$	841,112		$	835,584
Credit agreement commitment fees		-			6,301			-			31,460
Amortization of
credit agreement loan costs		60,489			73,146			518,479			209,903
Insurance installment loan		-			4,400			1,961			9,597
Other interest charges		3,066			39			8,095			1,062
Capitalized interest		(141,931	)		(266,949	)		(395,244	)		(750,107	)
Total interest expense	$	245,359		$	131,114		$	974,403		$	337,499

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10. MERGER WITH PYRAMID OIL COMPANY AND GOODWILL

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

10. MERGER WITH PYRAMID OIL COMPANY AND GOODWILL

On September 10, 2014, a wholly owned subsidiary of Pyramid merged with and into Yuma Energy, Inc., a Delaware corporation (“Yuma Co.”), in exchange for 66,336,701 shares of common stock (prior to the 1-for-20 reverse stock split as described in Note 15 – Subsequent Events) and Pyramid changed its name to “Yuma Energy, Inc.” (the “Pyramid merger”). As a result of the Pyramid merger, the former Yuma Co. stockholders received approximately 93% of the then outstanding common stock of the Company and thus acquired voting control. Although the Company was the legal acquirer, for financial reporting purposes the Pyramid merger was accounted for as a reverse acquisition of Pyramid by Yuma Co. The transaction qualified as a tax-deferred reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”).

The Pyramid merger was accounted for as a business combination in accordance with ASC 805 Business Combinations (“ASC 805”). ASC 805, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed in an acquisition. Certain assets and liabilities may be adjusted as additional information is obtained; but no later than one year from the acquisition date. The provisions of ASC 350, on Intangibles – Goodwill and Other require that intangible assets with indefinite lives, including goodwill, be evaluated on an annual basis for impairment, or more frequently if events occur or circumstances change that could potentially result in impairment. The goodwill impairment test requires the allocation of goodwill and all other assets and liabilities to reporting units; however, the Company has only one reporting unit.

The drop in crude oil prices and the resulting decline in the Company’s common share price since the Pyramid merger caused the Company to test goodwill for impairment at June 30, 2015. Goodwill was determined to be fully impaired and as a result, the balance of $4,927,508 was written off at that time.

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11. INCOME TAXES

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

11. INCOME TAXES

The following summarizes the income tax expense (benefit) and effective tax rates:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Consolidated net income (loss)
before income taxes	$	(2,162,873	)	$	239,243		$	(22,135,882	)	$	(16,928,915	)
Income tax expense (benefit)		(47,429	)		329,653			(1,272,664	)		(3,605,839	)
Effective tax rate		2.2	%		138	%		5.7	%		21.3	%

The differences between the U.S. federal statutory rate of 34% and the Company’s effective tax rates for the three and nine months ended September 30, 2016 and 2015 are due primarily to state taxes and nondeductible expenses. In addition, September 30, 2016 was impacted by the expected valuation allowance on our deferred tax asset at year-end, which affected our expected annual effective tax rate and the tax effect of nondeductible stock compensation.

The Company knows of no uncertain tax positions and has no unrecognized tax benefits for the nine months ended September 30, 2016 or September 30, 2015. Valuation allowances are established when the Company determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. As of September 30, 2016, the Company anticipates that it will have a net deferred tax asset at year-end 2016, for which a valuation allowance will be required. The Company has considered the effect of the valuation allowance in the current period in determining its expected annual effective tax rate to record tax expense for the period ending September 30, 2016. No valuation allowance was established as of September 30, 2015.

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12. CONTINGENCIES

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

12. CONTINGENCIES

Certain Legal Proceedings

From time to time, the Company is party to various legal proceedings arising in the ordinary course of business. While the outcome of lawsuits cannot be predicted with certainty, the Company is not currently a party to any proceeding that it believes, if determined in a manner adverse to the Company, could have a potential material adverse effect on its financial condition, results of operations, or cash flows.

Amanda Olivier, et al. v. Nabors Drilling USA, L.P., and Yuma Exploration and Production, Inc.

On July 9, 2014, Nabors Drilling USA, L.P. and other Nabors entities and Yuma Energy, Inc. and several of its wholly owned subsidiaries were named in a lawsuit filed in the District Court of Harris County, Texas, in the 80th Judicial District, concerning the death of an employee of Timco Services during the drilling of the Crosby 12-1 well. All of the Yuma-related entities, except for Yuma Exploration and Production, Inc., were voluntarily dismissed from the lawsuit by the Plaintiffs. The Company has tendered its defense to its liability insurance carriers who are responding. There has been one unsuccessful mediation session. Depositions are still ongoing. Defense counsel intends to file a motion seeking dismissal of the claims against Exploration, which is currently being finalized. Management believes that the Company is not liable, and has adequate insurance to meet any potential claim from this suit.

Ontiveros v. Pyramid Oil, LLC, Yuma Energy, Inc. et al.

In September 2015, a suit was filed against the Company and Pyramid Oil LLC styled Mark A. Ontiveros and Louise D. Ontiveros, Trustees of The Ontiveros Family Trust dated March 29, 2007 vs. Pyramid Oil, LLC, et al., Case Number 15CV02959 in the Superior Court of California, County of Santa Barbara, Cook Division. In the suit, the plaintiffs allege that the 1950 Community Oil and Gas Lease between them and Pyramid Oil LLC has expired by non-production.  The Company claims that the lease is still in effect, as there is no cessation of production time frame set out in the lease; production had temporarily ceased, but was still profitable when measured over an appropriate time period; and the Company was conducting workover operations on a well on the lease in an effort to re-establish production when served with the quit claim deed demand from the plaintiff’s attorney.  All present owners of the minerals covered by the 1950 Community Oil and Gas Lease, with the exception of the plaintiffs, have executed amendments signifying their concurrence that the 1950 Community Oil and Gas Lease is still in force and effect.  On June 23, 2016, Pyramid Oil LLC filed a First Amended Cross Complaint against Texican Energy Corporation and Everett Lawley alleging interference with contractual relations and prospective economic relations, and violation of the California Uniform Trade Secrets Act. The parties are presently in the process of document discovery.Management intends to defend the plaintiffs’ claims and pursue the cross claim vigorously.

Yuma Energy, Inc. v. Cardno PPI Technology Services, LLC Arbitration

On May 20, 2015, counsel for Cardno PPI Technology Services, LLC (“Cardno PPI”) sent a notice of the filing of liens totaling $304,209 on the Company’s Crosby 14 No. 1 Well and Crosby 14 SWD No. 1 Well in Vernon Parish, Louisiana. The Company disputed the validity of the liens and of the underlying invoices, and notified Cardno PPI that applicable credits had not been applied. The Company invoked mediation on August 11, 2015 on the issues of the validity of the liens, the amount due pursuant to terms of the parties’ Master Service Agreement (“MSA”), and PPI Cardno’s breaches of the MSA. Mediation was held on April 12, 2016; no settlement was reached.

On May 12, 2016, Cardno filed a lawsuit in Louisiana state court to enforce the liens; the Court entered an Order Staying Proceeding on June 13, 2016, ordering that the lawsuit “be stayed pending mediation/arbitration between the parties.” On June 17, 2016, the Company served a Notice of Arbitration on Cardno PPI, stating claims for breach of the MSA billing and warranty provisions. On July 15, 2016, Cardno PPI served a Counterclaim for $304,209 plus attorneys’ fees. The parties are currently engaged in the arbitrator selection process. Management intends to pursue the Company’s claims and to defend the counterclaim vigorously.

Environmental Remediation Contingencies

As of September 30, 2016, there were no known environmental or other regulatory matters related to the Company’s operations that were reasonably expected to result in a material liability to the Company. The Company’s operations are subject to numerous laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection.

Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East, et al. v. Tennessee Gas Pipeline Company, LLC, et al.

Exploration, a subsidiary of the Company, has been named as one of 97 defendants in a matter entitled Board of Commissioners of the Southeast Louisiana Flood Protection Authority – East, Individually and As the Board Governing the Orleans Levee District, the Lake Borgne Basin Levee District, and the East Jefferson Levee District v. Tennessee Gas Pipeline Company, LLC, et al., Civil District Court for the Parish of Orleans, State of Louisiana, No. 13-6911, Division “J” - 5, now removed as Civil Action No. 13-5410, before the United States District Court, Eastern District of Louisiana. Plaintiff filed the suit on July 24, 2013 seeking damages and injunctive relief arising out of defendants’ drilling, exploration, and production activities from the early 1900s to the present day in coastal areas east of the Mississippi River in Southeast Louisiana.

The suit alleges that defendants’ activities have caused “removal, erosion, and submergence” of coastal lands resulting in significant reduction or loss of the protection such lands afforded against hurricanes and tropical storms. Plaintiff alleges that it now faces increased costs to maintain and operate the man-made hurricane protection system and may reach the point where that system no longer adequately protects populated areas.

Plaintiff lists hundreds of wells, pipelines, and dredging events as possible sources of the alleged land loss. Exploration is named in association with 11 wells, four rights-of-way, and one dredging permit. The suit does not specify any deficiency or harm caused by any individual activity or facility.

Although the suit references various federal statutes as sources of standards of care, plaintiff claims that all causes of action arise under state law: negligence, strict liability, natural servitude of drain, public nuisance, private nuisance, and as third-party beneficiary under breach of contract.

The Company tendered its defense to its liability insurance carriers, who are responding. On February 13, 2015, the federal judge adjudicating the matter granted defendants “Joint Motion to Dismiss for Failure to State a Claim Under Rule 12(b)(6)”, thereby dismissing plaintiff’s claims with prejudice in the matter. On February 20, 2015, the Board of Orleans filed a notice of appeal to the U.S. Fifth Circuit. On February 29, 2016, oral arguments were held regarding the appeal, but as of July 31, 2016, no ruling on the appeal has been made. The Company will continue to contest plaintiff’s legal arguments and factual assertions. At this point in the legal process, no evaluation of the likelihood of an unfavorable outcome or associated economic loss can be made; therefore no liability has been recorded on the Company’s books.

Vintage Assets, Inc. v. Tennessee Gas Pipeline, L.L.C. et al.

On October 24, 2016, Texas Southeastern Gas Gathering Company (“TGG”), a subsidiary of the Company, was named as a defendant in an action by Vintage Assets, Inc. in the United States District Court for the Eastern District of Louisiana. Vintage claims that its property, located in Plaquemines Parish, has been damaged by the widening of canals used by the defendants. Between 1953 and 1970, the defendants’ predecessors received multiple right-of-way servitudes on Vintage’s property, which authorized the construction and operation of pipelines and dredge canals. The defendants dredged canals and laid pipelines pursuant to the rights of way agreements. Vintage alleges that its property has suffered damage because of defendants’ failure to maintain the pipeline canals and banks. Further Vintage alleges that this failure has caused ecological damages and loss of acreage due to erosion. The action is currently scheduled for trial in September 2017. Management intends to defend the plaintiffs’ claims vigorously and has notified its insurance carrier of the claim.  TGG sold all of its assets to High Point Gas Gathering in 2010.  At this point in the legal process, no evaluation of the likelihood of an unfavorable outcome or associated economic loss can be made; therefore no liability has been recorded on the Company’s books.

The Parish of St. Bernard v. Atlantic Richfield Co., et al

On October 13, 2016, two subsidiaries of the Company, Exploration and Yuma Petroleum Company (“YPC”), were named as defendants, among several other defendants, in an action by the Parish of St. Bernard in the Thirty-Fourth Judicial District of Louisiana. The petition alleges violations of the State and Local Coastal Resources Management Act of 1978, as amended, in the St. Bernard Parish.  The Company has notified its insurance carrier of the lawsuit.  Management intends to defend the plaintiffs’ claims vigorously.  At this point in the legal process, no evaluation of the likelihood of an unfavorable outcome or associated economic loss can be made; therefore no liability has been recorded on the Company’s books.

Audits

Louisiana, et al. Escheat Tax Audits

The States of Louisiana, Texas, Minnesota, North Dakota and Wyoming have notified the Company that they will examine the Company’s books and records to determine compliance with each of the examining state’s escheat laws. The review is being conducted by Discovery Audit Services, LLC. The Company has engaged Ryan, LLC to represent it in this matter. The exposure related to the audits is not currently determinable.

Louisiana Severance Tax Audit

The State of Louisiana, Department of Revenue, notified Exploration that it was auditing Exploration’s calculation of its severance tax relating to Exploration’s production from November 2012 through March 2016. The audit relates to the Department of Revenue’s recent interpretation of long-standing oil purchase contracts to include a disallowable “transportation deduction,” and thus to assert that the severance tax paid on crude oil sold during the contract term was not properly calculated. Exploration is currently waiting on the Department of Revenue’s final audit results. The exposure related to this audit is not currently determinable.

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13. GREATER MASTERS CREEK FIELD AREA

9 Months Ended

Sep. 30, 2016

Greater Masters Creek Field Area

13. GREATER MASTERS CREEK FIELD AREA

During the first quarter of 2016, the Company shut-in 14 Austin Chalk wells in Beauregard, Rapides and Vernon Parishes, Louisiana due to low oil and natural gas prices. Since production was not restarted from these wells, the associated leases have expired, reducing the Company’s proved reserves from year-end 2015 by approximately 1,629 MBoe, acreage by 22,021 gross (18,140 net) acres, operated proved undeveloped locations by three, and operated non-proved undeveloped locations by seven.

In addition, during the first quarter of 2016, the Company received notice from the operator of certain wells in Rapides and Vernon Parishes, Louisiana, that certain wells in which the Company has an interest were shut-in due to current economic conditions. The operator has since sold its interest. The subsequent operator has not restarted production from eight of these wells, and the leases associated with the shut-in wells have expired, reducing the Company’s acreage by 4,686 gross (1,389 net) acres.

In April 2016, a party to the participation agreement dated July 31, 2013 relating to the Company’s Greater Masters Creek Area exercised its option to participate under the participation agreement for a four percent working interest.

On April 4, 2016, the Company entered into an amendment effective March 1, 2016 to an oil and gas lease in the Greater Masters Creek Field area with a certain mineral owner for acreage that was not held by production as of March 31, 2016. The total acreage is approximately 25,139 acres and, by virtue of the Company conducting certain location clean-up operations, the lease has now been extended until December 31, 2016. This extension is subject to certain additional performance criteria, including the posting of a bond to cover P&A costs for wells located on this mineral owner’s property, and plugging and abandoning six of the mineral owner’s wells by December 31, 2016 at an estimated net cost of $426,000. The lease may be extended until June 30, 2017 by paying a rental of $628,450, or by spudding a new well before December 31, 2016. If the leased acreage expires, the Company’s proved reserves from year-end 2015 would be reduced by approximately 5,096 MBoe, the number of operated proved undeveloped locations and operated non-proved locations would be reduced by 13 and 16, respectively.

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14. TEXAS SOUTHEASTERN GAS MARKETING COMPANY

9 Months Ended

Sep. 30, 2016

Texas Southeastern Gas Marketing Company

14. TEXAS SOUTHEASTERN GAS MARKETING COMPANY

As of January 1, 2016, the Company decided to discontinue the operations of Texas Southeastern Gas Marketing Company due to the limited volumes of natural gas that it marketed, as well as the costs associated with accounting for the entity. Texas Southeastern Gas Marketing Company is not a significant subsidiary, and this discontinuation of operations does not represent a strategic shift in business for the Company.

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15. SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2016

Subsequent Events [Abstract]

15. SUBSEQUENT EVENTS

The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements, except as noted below or already recognized or disclosed in the Company’s filings with the SEC.

Davis Agreement and Plan of Merger and Reorganization

On October 26, 2016, the shareholders of the Company approved, among other proposals, (i) the conversion (the “Series A Conversion”) of the 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share of the Company (the “Series A Preferred Stock”), into common stock, no par value per share of the Company (the “common stock”), at a rate of 35 shares of common stock for each share of Series A Preferred Stock; (ii) the reincorporation of the Company from California to Delaware pursuant to a merger (the “Reincorporation Merger”) of the Company with and into Yuma Energy, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Yuma Delaware”); and (iii) the merger (the “Merger”) of Yuma Merger Subsidiary, Inc., a Delaware corporation and wholly owned subsidiary of Yuma Delaware (“Merger Subsidiary”), with and into Davis Petroleum Acquisition Corp., a Delaware corporation (“Davis”) with Davis surviving as a wholly owned subsidiary of Yuma Delaware. The Company issued approximately 19,411,000 shares of common stock as a result of the Series A Conversion. Immediately following the Series A Conversion, each share of common stock was exchanged for one-twentieth of one share of common stock, $0.001 par value per share of Yuma Delaware (the “Yuma Delaware Common Stock”) as part of the Reincorporation Merger.

New Credit Facility

Upon the closing of the Merger discussed above, the entire outstanding balance under the credit facility was assumed by Yuma Delaware in a new credit facility (“the Credit Agreement”). The Credit Agreement provides for a $75.0 million 3-year revolving credit facility with SG Americas Securities, LLC (“SG Americas”) as Lead Arranger and Bookrunner, SocGen as Administrative Agent and the lenders party thereto. The Credit Agreement replaces the Company’s existing credit agreement. The initial borrowing base of the Credit Agreement is $44.0 million, and is subject to redetermination as of January 1, 2017 as well as April 1st and October 1st of each year. As of October 26, 2016, Yuma Delaware had approximately $39.5 million outstanding under the Credit Agreement. The incremental $9.7 million of debt outstanding at October 26, 2016 under the new Credit Agreement from the Company’s outstanding debt balance of $29.8 million at September 30, 2016 was primarily the result of paying off Davis’ outstanding debt balance of $9.0 million at Bank of America, accrued interest under the old credit facilities, as well as fees associated with the new Credit Agreement. All of the obligations under the Credit Agreement, and the guarantee of those obligations, are secured by substantially all of the assets of Yuma Delaware and customary financial covenants have been made.

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4. FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair value measurements by hierarchy

	Fair value measurements at September 30, 2016
			Significant
	Quoted prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Commodity derivatives – oil	$	-	$	1,194,307	$	-	$	1,194,307
Liabilities:
Commodity derivatives – gas	$	-	$	78,763	$	-	$	78,763

	Fair value measurements at December 31, 2015
			Significant
	Quoted prices		other		Significant
	in active		observable		unobservable
	markets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Commodity derivatives – oil	$	-	$	3,442,693	$	-	$	3,442,693
Commodity derivatives – gas		-		285,895		-		285,895
Total assets	$	-	$	3,728,588	$	-	$	3,728,588

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5. COMMODITY DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Commodity derivative instruments

	2016			2017
	Settlement			Settlement
NATURAL GAS (MMBtu):
Swaps
Volume		105,475			-
Price	$	2.646	*		-
3-way collars
Volume		-			248,023
Ceiling sold price (call)		-		$	3.280	*
Floor purchased price (put)		-		$	2.946	*
Floor sold price (short put)		-		$	2.381	*
CRUDE OIL (Bbls):
Put spread
Volume		31,547			-
Floor purchased price (put)	$	62.27			-
Floor sold price (short put)	$	40.00			-
3-way collars
Volume		10,630			113,029
Ceiling sold price (call)	$	47.15		$	77.00
Floor purchased price (put)	$	40.00		$	60.00
Floor sold price (short put)	$	30.00		$	45.00

Schedule of derivative assets and liablities

	Fair value as of
	September 30,			December 31,
	2016			2015
Asset commodity derivatives:
Current assets	$	1,420,921		$	3,069,115
Noncurrent assets		326,656			1,841,120
		1,747,577			4,910,235
Liability commodity derivatives:
Current liabilities		(478,669	)		(411,068	)
Noncurrent liabilities		(153,364	)		(770,579	)
		(632,033	)		(1,181,647	)
Total commodity derivative instruments	$	1,115,544		$	3,728,588

Sales of natural gas and crude oil

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Sales of natural gas and crude oil	$	3,151,626		$	4,649,009	$	9,207,636		$	14,756,582
Gain realized from sale of commodity
derivatives		-			-		-			4,030,000
Other gains (losses) realized on
commodity derivatives		488,409			432,825		2,205,216			1,084,610
Unrealized gains (losses) on
commodity derivatives		(40,473	)		3,460,825		(2,613,044	)		(1,847,371	)
Total revenue from natural gas and crude oil	$	3,599,562		$	8,542,659	$	8,799,808		$	18,023,821

Schedule reconciliation of the components of accumulated other comprehensive income (loss) in the Consolidated Statements of Changes in Equity

	Nine Months Ended				Year Ended
	September 30, 2016				December 31, 2015
	Before tax		After tax		Before tax			After tax
Balance, beginning of period	$	-	$	-	$	63,091		$	38,801
Sale of unexpired contracts previously subject
to hedge accounting rules		-		-		(119,917	)		(73,749	)
Other reclassifications due to expired contracts
previously subject to hedge accounting rules		-		-		56,826			34,948
Balance, end of period	$	-	$	-	$	-		$	-

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8. EARNINGS (LOSS) PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2016

EARNINGS (LOSS) PER COMMON SHARE ADJUSTED FOR OCTOBER 26,2016 1-FOR-20 REVERSE STOCK SPLIT:

Potentially dilutive securities

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Restricted Stock Awards		74,261		78,716		99,315		68,691
Restricted Stock Units		-		4,771		-		4,771
		74,261		83,487		99,315		73,462

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9. DEBT AND INTEREST EXPENSE (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Debt

	September 30,			December 31,
	2016			2015
Variable rate revolving credit agreement payable to Société Générale,
CIT Bank, NAC, and LegacyTexas Bank, maturing October 31, 2017,
secured by the stock of Exploration and its interest in POL, and
guaranteed by The Yuma Companies, Inc.	$	29,800,000		$	29,800,000
Installment loan due February 29, 2016, originating from the
financing of insurance premiums at 3.74% interest rate.		-			108,894
Installment loan due June 11, 2016, originating from the
financing of insurance premiums at 3.76% interest rate.		-			154,741
		29,800,000			30,063,635
Less: current portion		(29,800,000	)		(30,063,635	)
Total long-term debt	$	-		$	-

Schedule interest expense

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Credit agreement	$	323,735		$	314,177		$	841,112		$	835,584
Credit agreement commitment fees		-			6,301			-			31,460
Amortization of
credit agreement loan costs		60,489			73,146			518,479			209,903
Insurance installment loan		-			4,400			1,961			9,597
Other interest charges		3,066			39			8,095			1,062
Capitalized interest		(141,931	)		(266,949	)		(395,244	)		(750,107	)
Total interest expense	$	245,359		$	131,114		$	974,403		$	337,499

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11. INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2016

Income Taxes Tables

Schedule income tax expense (benefit) and effective tax rates

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Consolidated net income (loss)
before income taxes	$	(2,162,873	)	$	239,243		$	(22,135,882	)	$	(16,928,915	)
Income tax expense (benefit)		(47,429	)		329,653			(1,272,664	)		(3,605,839	)
Effective tax rate		2.2	%		138	%		5.7	%		21.3	%

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4. FAIR VALUE MEASUREMENTS (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Total assets	$ 1,194,307	$ 3,728,588
Commodity derivatives - oil
Total assets	1,194,307	3,442,693
Commodity derivatives - gas
Total assets		285,895
Total Liabilities	78,763
Quoted prices in active markets (Level 1)
Total assets	0	0
Quoted prices in active markets (Level 1) | Commodity derivatives - oil
Total assets	0	0
Quoted prices in active markets (Level 1) | Commodity derivatives - gas
Total assets		0
Total Liabilities	0
Significant other observable inputs (Level 2)
Total assets	1,194,307	3,728,588
Significant other observable inputs (Level 2) | Commodity derivatives - oil
Total assets	1,194,307	3,442,693
Significant other observable inputs (Level 2) | Commodity derivatives - gas
Total assets		285,895
Total Liabilities	78,763
Significant unobservable inputs (Level 3)
Total assets	0	0
Significant unobservable inputs (Level 3) | Commodity derivatives - oil
Total assets	0	0
Significant unobservable inputs (Level 3) | Commodity derivatives - gas
Total assets		$ 0
Total Liabilities	$ 0

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5. COMMODITY DERIVATIVE INSTRUMENTS (Details)		Dec. 31, 2017 bbl MMBbls $ / bbl $ / MMBTU	Dec. 31, 2016 bbl MMBbls $ / bbl $ / MMBTU
Swaps
Natural Gas (MMBtu):
Volume | MMBbls			105,475
Price(NYMEX) | $ / MMBTU	[1]		2.646
3-Way Collars
Natural Gas (MMBtu):
Volume | MMBbls		248,023
Ceiling sold price (call) (NYMEX) | $ / MMBTU	[1]	3.280
Floor purchased price (put) (NYMEX) | $ / MMBTU	[1]	2.946
Floor sold price (short put) (NYMEX) | $ / MMBTU	[1]	2.381
Crude Oil:
Volume | bbl		113,029	10,630
Ceiling sold price (call) (WTI)		77.00	47.15
Floor purchased price (put) (WTI)		60	40
Floor sold price (short put) (WTI)		45	30
Put Spread
Crude Oil:
Volume | bbl			31,547
Floor Purchased Price (put)(LLS)			62.27
Floor sold price (short put) (LLS)			40

[1] Price is a weighted average

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5. COMMODITY DERIVATIVE INSTRUMENTS (Details 1) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Asset commodity derivatives:
Current assets	$ 1,420,921	$ 3,069,115
Noncurrent assets	326,656	1,841,120
Total	1,747,577	4,910,235
Liability commodity derivatives:
Current liabilities	(478,669)	(411,068)
Noncurrent liabilities	(153,364)	(770,579)
Total	(632,033)	(1,181,647)
Total commodity derivative instruments	$ 1,115,544	$ 3,728,588

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5. COMMODITY DERIVATIVE INSTRUMENTS (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commodity Derivative Instruments Details 2
Sales of natural gas and crude oil	$ 3,151,626	$ 4,649,009	$ 9,207,636	$ 14,756,582
Gain realized from sale of commodity derivatives	0	0	0	4,030,000
Other gains (losses) realized on commodity derivatives	488,409	432,825	2,205,216	1,084,610
Unrealized gains (losses) on commodity derivatives	(40,473)	3,460,825	(2,613,044)	(1,847,371)
Total revenue from natural gas and crude oil	$ 3,599,562	$ 8,542,659	$ 8,799,808	$ 18,023,821

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5. COMMODITY DERIVATIVE INSTRUMENTS (Details 3) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Balance, beginning of period, before tax	$ 0	$ 63,091
Balance, beginning of period, after tax	0	38,801
Sale of unexpired contracts previously subject to hedge accounting rules before tax	0	(119,917)
Sale of unexpired contracts previously subject to hedge accounting rules after tax	0	(73,749)
Other reclassifications due to expired contracts previously subject to hedge accounting rules, before tax	0	56,826
Other reclassifications due to expired contracts previously subject to hedge accounting rules, after tax	0	34,948
Balance, end of period, before tax	0	0
Balance, end of period, after tax	$ 0	$ 0

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6. ASSET IMPAIRMENTS (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Asset Impairments Details Narrative
Oil and gas impairment	$ 11,015,589	$ 0
Impairment of goodwill	$ 0	$ 4,927,508

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8. EARNINGS PER COMMON SHARE (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Common Share Details
Restricted Stock Awards	74,261	78,716	99,315	68,691
Restricted Stock Units	0	4,771	0	4,771
Total	74,261	83,487	99,315	73,462

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9. DEBT AND INTEREST EXPENSE (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Total Debt	$ 29,800,000	$ 30,063,635
Less: current portion	(29,800,000)	(30,063,635)
Total long-term debt	0	0
Variable rate revolving credit facility payable [Member]
Total Debt	29,800,000	29,800,000
Installment loan due February 29, 2016 [Member]
Total Debt	0	108,894
Installment loan due June 11, 2015 [Member]
Total Debt	$ 0	$ 154,741

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9. DEBT AND INTEREST EXPENSE (Details 1) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Debt Disclosure [Abstract]
Credit agreement	$ 323,735	$ 314,177	$ 841,112	$ 835,584
Credit agreement commitment fees	0	6,301	0	31,460
Amortization of credit agreement loan costs	60,489	73,146	518,479	209,903
Insurance installment loan	0	4,400	1,961	9,597
Other interest charges	3,066	39	8,095	1,062
Capitalized interest	(141,931)	(266,949)	(395,244)	(750,107)
Total interest expense	$ 245,359	$ 131,114	$ 974,403	$ 337,499

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11. INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Taxes Tables
Consolidated net income (loss) before income taxes	$ (2,162,873)	$ 239,243	$ (22,135,882)	$ (16,928,915)
Income tax expense (benefit)	$ (47,429)	$ 329,653	$ (1,272,664)	$ (3,605,839)
Effective tax rate	2.20%	138.00%	5.70%	21.30%