Crude Oil and Natural Gas Property Information

12 Months Ended

Sep. 30, 2014

Oil and Gas Properties [Abstract]

CRUDE OIL AND NATURAL GAS PROPERTY INFORMATION

18. CRUDE OIL AND NATURAL GAS PROPERTY INFORMATION

Results of Operations from Oil and Gas Producing Activities

The following table sets forth the results of the Company’s operations from oil (in the form of bitumen) producing activities from the Company’s Sawn Lake oil sands properties located in Alberta, Canada, for the years ended September 30, 2014 and 2013:

	September 30, 2014			September 30, 2013
Oil sales after royalties	$	47,116		$	–
Production (Operating) expenses		(47,115	)		–
Exploration expenses		(47,182	)		(55,810	)
Depreciation, accretion and depletion		(97,646	)		(106,476	)
		(144,827	)		(162,286	)
Income tax expenses		–			–
Results of operations from producing activities	$	(144,827	)	$	(162,286	)

The Company reported its first oil revenue in the amount of $47,116 after deduction of royalties. Given that the Company’s first oil production began on September 16, 2014, the Company produced oil for only 14 days during the year ending September 30, 2014; therefore the volumes of oil delivered were only 818.6 barrels net to the Company, before royalties, with an average oil sales price of $61.77 per barrel. Operating expenses are zero since at this time they were paid for under the Farmout Agreement. Transportation costs are included in these operating costs. The total share of the material costs and operating expenses of the Company’s joint SAGD Project, has been funded in accordance with the Farmout Agreement, at a net cost to the Company of $Nil. As required by the Farmout Agreement, the Farmee has since paid Cdn $16,677,530 to the operator of the SAGD Project for the Farmee’s share and the Company’s share of the costs of the SAGD Project up to September 30, 2014. These costs included the drilling of the SAGD well pair; the purchase and transportation of equipment; installation and construction of the steam plant facility; testing and commissioning; the purchase of the water source and disposal wells and expenditures to connect these water wells to the steam plant facility along with a fuel source tie-in; and the monthly operating expenses associated with the steaming and production of the SAGD well pair up to September 30, 2014.

Capitalized Costs Relating Specifically to the SAGD Project

The Company entered into a Farmout Agreement dated July 31, 2013, whereby the Company’s operating costs of the SAGD Project are paid in full by the Farmee in accordance with the Farmout Agreement; therefore the Company has not capitalized any of the operating costs paid by the Farmee to the operator of the SAGD Project. As required by the Farmout Agreement, the Farmee has since paid Cdn $16,677,530 to the operator of the SAGD Project for the Farmee’s share and the Company’s share of the costs of the SAGD Project up to September 30, 2014. See Note 4 herein “Capitalization of Costs Incurred in Oil and Gas Activities”.

Costs Incurred in Oil and Gas Property Acquisition, Exploration, and Development

See Note 5 herein “Exploration Activities”.