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Property
6 Months Ended
Jun. 30, 2022
Property, Plant and Equipment [Abstract]  
Property

Note 3 – Property

The Company follows the successful efforts method of accounting for its oil and natural gas properties. Under this method, costs to acquire oil and natural gas properties and costs incurred to drill and equip development and exploratory wells are capitalized. Exploration costs are charged to operations as incurred. Upon sale or retirement of oil and natural gas properties, the costs and related accumulated depreciation, depletion and amortization are eliminated from the accounts and the resulting gain or loss is recognized.

 

Costs incurred to maintain wells and related equipment and lease and well operating costs are charged to expense as incurred.

 

Depletion is calculated on a units-of-production basis at the field level based on total proved developed reserves.

 

Proved Properties and Impairments

Proved oil and natural gas properties are reviewed for impairment at least annually, or as indicators of impairment arise. There have been no indicators of impairment in any period disclosed in these financial statements.

 

In May 2021, the Company purchased oil and natural gas properties in New Mexico (see Note 4).

 

In April 2022, the Company purchased working interests of oil and natural gas properties primarily located in the Landa field in North Dakota through its wholly owned subsidiary Empire NDA and assumed the role of operator. The Company paid approximately $1.4 million for eight producing properties, two properties with behind-pipe reserves, and related lease and well equipment. The Company allocated 80% of the acquisition cost to leasehold costs and the remaining 20% to related lease and well equipment. Non-cash asset retirement obligations were assumed of $233,659. The acquisition was accounted for as an asset acquisition.

 

Aggregate capitalized costs of oil and natural gas properties as of June 30, 2022 are as follows: 

Proved producing wells  $23,172,667 
Proved undeveloped   2,777,634 
Lease and well equipment   6,207,868 
Asset retirement obligation   18,268,308 
Gross capitalized costs   50,426,477 
Accumulated depreciation, depletion, amortization and impairment   (18,202,939)
Net capitalized costs  $32,223,538 

 

 

Other property and equipment consists of operating lease assets, vehicles, office furniture, and equipment with lives ranging from three to five years.

 

      
Other property and equipment, at cost  $1,731,485 
Less: accumulated depreciation   (409,162)
Other property and equipment, net  $1,322,323