Oil and Gas Properties

6 Months Ended

Mar. 31, 2018

Oil and Gas Properties [Abstract]

OIL AND GAS PROPERTIES

3. OIL AND GAS PROPERTIES

The Company’s oil sands acreage as of March 31, 2018, covers 43,015 gross acres (34,096 net acres) of land under nine oil sands leases. Until the Company extends the leases “into perpetuity” based on the Alberta governmental regulations, the lease expiration dates of the Company’s nine oil sands leases are as follows:

1) 32 sections of land under 5 oil sands leases are set to expire on July 10, 2018. Of the 5 oil sands leases it is the Company’s opinion that the Company has already met the governmental requirements on 17 of the 32 sections to continue these sections into perpetuity. These 17 sections contain the majority of the resources identified to date on these 5 oil sands leases. The Company has completed or is in the process of applying for continuation of these leases or parts of the leases where the majority of the oil sands resources have been confirmed. Currently, 11 out of the 17 sections that contain the majority of the resources identified to date have been granted continuance under the Alberta governmental tenure guidelines;

2) 31 sections of land under 3 oil sands leases are set to expire on August 19, 2019; and

3) 5 sections of land under 1 oil sands lease are set expire on April 9, 2024. It is the Company’s opinion that the Company has already met the governmental requirements for this lease and it will be applying to continue all 5 sections of this lease into perpetuity.

On November 21, 2017, the Company’s joint venture partner and operator of two jointly held oil sands leases, where the Company has working interests, submitted two continuation applications to the Alberta Oil Sands Tenure division to apply to continue two oil sands leases that were set to expire on July 10, 2018. On January 29, 2018, the Company’s joint venture partner received approval from Alberta Energy, under the Alberta Oil Sands Tenure Regulation, to continue 2,816 gross hectares (704 hectares net to the Company) of lands, with a non-producing status, effective July 10, 2018. These two continued leases have no future expiry dates but are subject to yearly escalating rental payments until they are deemed to be producing leases.

Lease Rental Commitments

The Company has acquired interests in certain oil sands properties located in North Central Alberta, Canada. The lease terms include certain commitments related to oil sands properties that require the payments of yearly rents. As required by the Oil Sands Tenure Regulation of the Mines and Minerals Act of Alberta continued oil sands leases past their expiry dates are subject to escalating rental payments in respect of each term year of a continued lease that is designated as non-producing less any eligible research costs, exploration costs and development costs that are incurred in the term year of a continued lease. Escalating rent is payable at the end of each term year, while annual rent for leases are due at the beginning of each term year. Lessees of continued oil sands leases may reduce or eliminate their escalating rent obligations by conducting exploration or development work, or research, on the non-producing lease. As of March 31, 2018, excluding any eligible research, exploration and or development costs that may be used to reduce the Company’s yearly escalating future rents, the following table sets out the estimated net payments due under this commitment, which could be as high:

	(USD $)		(Cdn $)
2018	$	16,139	$	20,808
2019	$	20,958	$	27,022
2020	$	20,958	$	27,022
2021	$	19,916	$	25,678
2022	$	26,943	$	34,738
Subsequent	$	151,746	$	195,650

The Company follows the full cost method of accounting for costs of oil properties. Under this method, oil and gas properties, for which no proved reserves have been assigned, must be assessed at least annually to ascertain whether or not a write down should occur. Unproven properties are assessed annually, or more frequently as economic events indicate, for potential write down.

This consists of comparing the carrying value of the asset with the asset’s expected future undiscounted cash flows without interest costs. Estimates of expected future cash flows represent management’s best estimate based on reasonable and supportable assumptions. Proven oil properties are reviewed for any write down on a field-by-field basis. No write downs were recognized for the period ended March 31, 2018.

Capitalized costs of proven oil properties will be depleted using the unit-of-production method when the property is placed in production.

Substantially all of the Company’s oil activities are conducted jointly with others. The accounts reflect only the Company’s proportionate interest in such activities.