Document And Entity Information
v3.19.3
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2019
Nov. 04, 2019
Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Entity Registrant Name TENGASCO INC  
Entity Central Index Key 0001001614  
Entity Filer Category Non-accelerated Filer  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   10,658,775
Title of 12(b) Security Common Stock  
Trading Symbol tgc  
Security Exchange Name NYSE  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  

Condensed Consolidated Balance Sheets
v3.19.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Current    
Cash and cash equivalents $ 3,482 $ 3,115
Accounts receivable 511 533
Inventory 325 464
Prepaid expenses 192 235
Total current assets 4,510 4,347
Loan fees, net 5 9
Right of use asset - operating leases 55  
Oil and gas properties, net (full cost accounting method) 4,344 4,804
Other property and equipment, net 134 190
Accounts receivable - noncurrent 130 130
Other noncurrent assets 4 4
Total assets 9,182 9,484
Current liabilities    
Accounts payable - trade 127 132
Accrued liabilities 231 282
Lease liabilities - operating leases - current 56  
Lease liabilities - finance leases - current 59  
Current maturities of long-term debt 51
Asset retirement obligation - current 83 83
Total current liabilities 556 548
Lease liabilities - operating leases - noncurrent
Lease liabilities - finance leases - noncurrent 29  
Long term debt, less current maturities 73
Asset retirement obligation - non current 2,085 2,096
Total liabilities 2,670 2,717
Commitments and contingencies (Note 12)
Preferred stock, 25,000,000 shares authorized:    
Series A Preferred stock, $0.0001 par value, 10,000 shares designated; 0 shares issued and outstanding
Common stock, $.001 par value, authorized 100,000,000 shares, 10,653,550 and 10,639,290 shares issued and outstanding 11 11
Additional paid-in capital 58,290 58,276
Accumulated deficit (51,789) (51,520)
Total stockholders' equity 6,512 6,767
Total liabilities and stockholders' equity $ 9,182 $ 9,484

Condensed Consolidated Balance Sheets (Parenthetical)
v3.19.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2019
Dec. 31, 2018
Preferred stock, shares authorized 25,000,000 25,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 10,653,550 10,639,290
Common stock, shares outstanding 10,653,550 10,639,290
Series A Preferred Stock [Member]    
Preferred stock, par value $ 0.0001 $ 0.0001
Preferred stock, shares authorized 10,000 10,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0

Condensed Consolidated Statements Of Operations
v3.19.3
Condensed Consolidated Statements Of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Revenues        
Revenues $ 1,215 $ 1,654 $ 3,777 $ 4,497
Cost and expenses        
Production costs and taxes 913 862 2,604 2,502
Depreciation, depletion, and amortization 186 219 566 599
General and administrative 297 288 913 896
Total cost and expenses 1,396 1,369 4,083 3,997
Net income (loss) from operations (181) 285 (306) 500
Other income (expense)        
Interest expense (2) (1) (8) (4)
Gain on sale of assets 1 14 45 34
Total other income (expense) (1) 13 37 30
Net income (loss) from operations before income tax (182) 298 (269) 530
Deferred income tax benefit
Net income (loss) from continuing operations (182) 298 (269) 530
Net income from discontinued operations       1,120
Net income (loss) $ (182) $ 298 $ (269) $ 1,650
Net income (loss) per share - basic and fully diluted        
Continuing operations $ (0.02) $ 0.03 $ (0.03) $ 0.05
Discontinued operations       $ 0.11
Shares used in computing earnings per share        
Basic and fully diluted 10,653,550.00 10,624,493.00 10,648,838.00 10,624,476.00
Oil And Gas Proeprties [Member]        
Revenues        
Revenues $ 1,215 $ 1,654 $ 3,777 $ 4,497

Condensed Consolidated Statements Of Cash Flows
v3.19.3
Condensed Consolidated Statements Of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Operating activities    
Net income (loss) from continuing operations $ (269) $ 530
Adjustments to reconcile net income (loss) to net cash provided by operating activities:    
Depreciation, depletion, and amortization 566 599
Amortization of loan fees-interest expense 4 3
Accretion on asset retirement obligation 100 106
Gain on asset sales (45) (34)
Stock based compensation 14 4
Changes in assets and liabilities:    
Accounts receivable 22 (57)
Inventory and other assets 78 (144)
Accounts payable 4 (14)
Accrued and other current liabilities (51) 30
Settlement on asset retirement obligation (52) (5)
Net cash provided by operating activities - continuing operations 371 1,018
Net cash provided by operating activities - discontinued operations   45
Net cash provided by operating activities 371 1,063
Investing activities    
Additions to oil and gas properties (153) (453)
Proceeds from sale of oil and gas properties 41 7
Additions to other property and equipment (2) (28)
Proceeds from sale of other property and equipment   8
Proceeds from sale of materials inventory 150  
Net cash provided by (used in) investing activities - continuing operations 36 (466)
Net cash provided by investing activities - discontinued operations   2,650
Net cash provided by investing activities 36 2,184
Financing activities    
Repayments of borrowings (40) (130)
Proceeds from borrowings   100
Net cash used in financing activities - continuing operations (40) (30)
Net cash provided by (used in) financing activities - discontinued operations
Net cash used in financing activities (40) (30)
Net change in cash and cash equivalents 367 3,217
Cash and cash equivalents, beginning of period 3,115 185
Cash and cash equivalents, end of period 3,482 3,402
Supplemental cash flow information:    
Cash interest payments 4  
Supplemental non-cash investing and financing activities:    
Financed company vehicles $ 30 76
Capital expenditures included in accounts payable and accrued liabilities   $ 227

Changes In Stockholders' Equity
v3.19.3
Changes In Stockholders' Equity - USD ($)
$ in Thousands
Common Stock [Member]
Paid-In Capital [Member]
Accumulated Deficit [Member]
Total
Balance, value at Dec. 31, 2017 $ 11 $ 58,253 $ (53,089) $ 5,175
Balance, shares at Dec. 31, 2017 10,619,924.00      
Net income (loss)     1,243 1,243
Compensation expense related to stock issued   4   4
Compensation expense related to stock issued, shares 4,569.00      
Balance, shares at Mar. 31, 2018 10,624,493.00      
Balance, value at Mar. 31, 2018 $ 11 58,257 (51,846) 6,422
Balance, value at Dec. 31, 2017 $ 11 58,253 (53,089) 5,175
Balance, shares at Dec. 31, 2017 10,619,924.00      
Net income (loss)       1,650
Balance, shares at Sep. 30, 2018 10,624,493.00      
Balance, value at Sep. 30, 2018 $ 11 58,257 (51,439) 6,829
Balance, value at Mar. 31, 2018 $ 11 58,257 (51,846) 6,422
Balance, shares at Mar. 31, 2018 10,624,493.00      
Net income (loss)     109 109
Compensation expense related to stock issued
Compensation expense related to stock issued, shares      
Balance, shares at Jun. 30, 2018 10,624,493.00      
Balance, value at Jun. 30, 2018 $ 11 58,257 (51,737) 6,531
Net income (loss)     298 298
Compensation expense related to stock issued
Compensation expense related to stock issued, shares      
Balance, shares at Sep. 30, 2018 10,624,493.00      
Balance, value at Sep. 30, 2018 $ 11 58,257 (51,439) 6,829
Balance, value at Dec. 31, 2018 $ 11 58,276 (51,520) $ 6,767
Balance, shares at Dec. 31, 2018 10,639,290.00     10,639,290
Net income (loss)     (96) $ (96)
Compensation expense related to stock issued   4   4
Compensation expense related to stock issued, shares 4,962.00      
Balance, shares at Mar. 31, 2019 10,644,252.00      
Balance, value at Mar. 31, 2019 $ 11 58,280 (51,616) 6,675
Balance, value at Dec. 31, 2018 $ 11 58,276 (51,520) $ 6,767
Balance, shares at Dec. 31, 2018 10,639,290.00     10,639,290
Net income (loss)       $ (269)
Balance, shares at Sep. 30, 2019 10,653,550.00     10,653,550
Balance, value at Sep. 30, 2019 $ 11 58,290 (51,789) $ 6,512
Balance, value at Mar. 31, 2019 $ 11 58,280 (51,616) 6,675
Balance, shares at Mar. 31, 2019 10,644,252.00      
Net income (loss)     9 9
Compensation expense related to stock issued   6   6
Compensation expense related to stock issued, shares 4,411.00      
Balance, shares at Jun. 30, 2019 10,648,663.00      
Balance, value at Jun. 30, 2019 $ 11 58,286 (51,607) 6,690
Net income (loss)     (182) (182)
Compensation expense related to stock issued   4   $ 4
Compensation expense related to stock issued, shares 4,887.00      
Balance, shares at Sep. 30, 2019 10,653,550.00     10,653,550
Balance, value at Sep. 30, 2019 $ 11 $ 58,290 $ (51,789) $ 6,512

Description Of Business And Significant Accounting Policies
v3.19.3
Description Of Business And Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Description Of Business And Significant Accounting Policies [Abstract]  
Description Of Business And Significant Accounting Policies

(1)  Description of Business and Significant Accounting Policies



Tengasco, Inc. (the “Company”) is a Delaware corporation.  The Company is in the business of exploration for and production of oil and natural gas.  The Company’s primary area of exploration and production is in Kansas. 



The Company’s wholly-owned subsidiary, Manufactured Methane Corporation (“MMC”) operated treatment and delivery facilities in Church Hill, Tennessee for the extraction of methane gas from a landfill for eventual sale as natural gas and for the generation of electricity.  The Company sold all its methane facility assets, except the applicable U.S. patent, on January 26, 2018 for $2.65 million. (See Note 10. Discontinued Operations)



Basis of Presentation



The accompanying unaudited condensed consolidated financial statements as of September 30, 2019 and September 30, 2018 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The condensed consolidated balance sheet as of December 31, 2018 is derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.  The Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01.  Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.



Principles of Consolidation



The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany transactions and balances.



Use of Estimates



The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Significant estimates include reserve quantities and estimated future cash flows associated with proved reserves, which significantly impact depletion expense and potential impairments of oil and natural gas properties, income taxes and the valuation of deferred tax assets, stock-based compensation, and commitments and contingencies.  We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable. While we believe that our estimates and assumptions used in preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates and assumptions.



Revenue Recognition



The Company identifies the contracts with each of its customers and the separate performance obligations associated with each of these contracts.  Revenues are recognized when the performance obligations are satisfied and when control of goods or services are transferred to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.



Crude oil is sold on a month-to-month contract at a price based on an index price from the purchaser, net of differentials.  Crude oil that is produced is stored in storage tanks.  The Company will contact the purchaser and request it to pick up the crude oil from the storage tanks.  When the purchaser picks up the crude from the storage tanks, control of the crude transfers to the purchaser, the Company’s contractual obligation is satisfied, and revenues are recognized.  The sales of oil represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others.  When selling oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports revenues on a net basis to the Company.  Fees and other deductions incurred prior to transfer of control are recorded as production costs.  Revenues are reported net of fees and other deductions incurred after transfer of control.



Electricity from the Company’s methane facility was sold on a long term contract.  There was no specific quantity of electricity that was required to be delivered under this contract.  Electricity passed through sales meters located at the Carter Valley landfill site, at which time control of the electricity transferred to the purchaser, the Company’s contractual obligation was satisfied, and revenues were recognizedThe Company sold its methane facility and generation assets on January 26, 2018 and therefore has not recognized revenues associated with any sales volumes after that date.  Revenues associated with the methane facility are included in Discontinued Operations.  (See Note 10. Discontinued Operations)



The Company operates certain salt water disposal wells, some of which accept water from third parties.  The contracts with the third parties primarily require a flat monthly fee for the third parties to dispose water into the wells.  In some cases, the contract is based on a per barrel charge to dispose water into the wells.  There is no requirement under the contracts for these third parties to use these wells for their water disposal.  If the third parties do dispose water into the Company operated wells during a given month, the Company has met its contractual obligations and revenues are recognized for that month.



The following table presents the disaggregated revenue by commodity for the three months and nine months ended September 30, 2019 and 2018 (in thousands):  









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

$

1,208 

 

$

1,647 

 

$

3,757 

 

$

4,472 

Saltwater disposal fees

 

 

 

 

 

 

20 

 

 

25 

Total

 

$

1,215 

 

$

1,654 

 

$

3,777 

 

$

4,497 



There were no natural gas imbalances at September 30, 2019 or December 31, 2018. 



Cash and Cash Equivalents



Cash and cash equivalents include temporary cash investments with a maturity of ninety days or less at date of purchase.



Inventory



Inventory consists of crude oil in tanks and is carried at lower of cost or market value.  The cost component of the oil inventory is calculated using the average cost per barrel for the three months ended September 30, 2019 and December 31, 2018.  These costs include production costs and taxes.  The market value component is calculated using the average September 2019 and December 2018 oil sales prices received from the Company’s Kansas properties.  In addition, at December 31, 2018, the Company recorded equipment and materials to be used in its Kansas operation as inventory and was carried at the lower of cost or market value.  The equipment inventory was sold to a third party during the three months ended March 31, 2019.  The cost component of the equipment and materials inventory represented the original cost paid for the equipment and materials.  The market component is based on estimated sales value for similar equipment and materials at the end of each period.  At September 30, 2019 and December 31, 2018, inventory consisted of the following (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Oil – carried at cost

 

$

325 

 

$

359 

Equipment and materials – carried at market

 

 

 —

 

 

105 

Total inventory

 

$

325 

 

$

464 



Full Cost Method of Accounting



The Company follows the full cost method of accounting for oil and gas property acquisition, exploration, and development activities.  Under this method, all costs incurred in connection with acquisition, exploration, and development of oil and gas reserves are capitalized.  Capitalized costs include lease acquisitions, seismic related costs, certain internal exploration costs, drilling, completion, and estimated asset retirement costs. The capitalized costs of oil and gas properties, plus estimated future development costs relating to proved reserves and estimated asset retirement costs which are not already included, net of estimated salvage value, are amortized on the unit-of-production method based on total proved reserves. The Company has determined its reserves based upon reserve reports provided by LaRoche Petroleum Consultants Ltd. since 2009. The costs of unproved properties are excluded from amortization until the properties are evaluated, subject to an annual assessment of whether impairment has occurred.  The Company had $0 in unevaluated properties as of September 30, 2019 and $23,000 at December 31, 2018.  Proceeds from the sale of oil and gas properties are accounted for as reductions to capitalized costs unless such sales cause a significant change in the relationship between costs and the estimated value of proved reserves, in which case a gain or loss is recognized.



At the end of each reporting period, the Company performs a “ceiling test” on the value of the net capitalized cost of oil and gas properties. This test compares the net capitalized cost (capitalized cost of oil and gas properties, net of accumulated depreciation, depletion and amortization and related deferred income taxes) to the present value of estimated future net revenues from oil and gas properties using an average price (arithmetic average of the beginning of month prices for the prior 12 months) and current cost discounted at 10%  plus cost of properties not being amortized and the lower of cost or estimated  fair value of unproven properties included in the cost being amortized (ceiling). If the net capitalized cost is greater than the ceiling, a write-down or impairment is required.  A write-down of the carrying value of the asset is a non-cash charge that reduces earnings in the current period.  Once incurred, a write-down may not be reversed in a later period.  The Company did not record any impairment of its oil and gas properties during the nine months ended September 30, 2019 and 2018.



Accounts Receivable



Accounts receivable consist of uncollateralized joint interest owner obligations due within 30 days of the invoice date, uncollateralized accrued revenues due under normal trade terms, generally requiring payment within 30 days of sales of oil and gas production, and other miscellaneous receivables. No interest is charged on past-due balances. Payments made on accounts receivable are applied first to the earliest unpaid items. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible. There was no allowance recorded at September 30, 2019 or December 31, 2018.



The following table sets forth information concerning the Company’s accounts receivable (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Revenue

 

$

378 

 

$

396 

Tax

 

 

129 

 

 

129 

Joint interest

 

 

 

 

Accounts receivable - current

 

$

511 

 

$

533 



 

 

 

 

 

 

Tax - noncurrent

 

$

130 

 

$

130 

 

At September 30, 2019 and December 31, 2018, the Company recorded a tax related current receivable of $129,000 and a tax related non-current receivable of $130,000.  (See Note 2. Income Taxes) 



Reclassifications



Certain prior year amounts have been reclassified to conform to current year presentation with no effect on net income.


Description Of Business And Significant Accounting Policies (Policy)
v3.19.3
Description Of Business And Significant Accounting Policies (Policy)
9 Months Ended
Sep. 30, 2019
Description Of Business And Significant Accounting Policies [Abstract]  
Basis Of Presentation

Basis of Presentation



The accompanying unaudited condensed consolidated financial statements as of September 30, 2019 and September 30, 2018 have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Item 210 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements.  The condensed consolidated balance sheet as of December 31, 2018 is derived from the audited financial statements, but does not include all disclosures required by U.S. GAAP.  The Company believes that the disclosures made are adequate to make the information not misleading. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included as required by Regulation S-X, Rule 10-01.  Operating results for the nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ended December 31, 2019. It is suggested that these condensed consolidated financial statements be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Principles Of Consolidation

Principles of Consolidation



The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all significant intercompany transactions and balances.

Use Of Estimates

Use of Estimates



The accompanying condensed consolidated financial statements are prepared in conformity with U.S. GAAP which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Significant estimates include reserve quantities and estimated future cash flows associated with proved reserves, which significantly impact depletion expense and potential impairments of oil and natural gas properties, income taxes and the valuation of deferred tax assets, stock-based compensation, and commitments and contingencies.  We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable. While we believe that our estimates and assumptions used in preparation of the condensed consolidated financial statements are appropriate, actual results could differ from those estimates and assumptions.

Revenue Recognition

Revenue Recognition



The Company identifies the contracts with each of its customers and the separate performance obligations associated with each of these contracts.  Revenues are recognized when the performance obligations are satisfied and when control of goods or services are transferred to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.



Crude oil is sold on a month-to-month contract at a price based on an index price from the purchaser, net of differentials.  Crude oil that is produced is stored in storage tanks.  The Company will contact the purchaser and request it to pick up the crude oil from the storage tanks.  When the purchaser picks up the crude from the storage tanks, control of the crude transfers to the purchaser, the Company’s contractual obligation is satisfied, and revenues are recognized.  The sales of oil represent the Company’s share of revenues net of royalties and excluding revenue interests owned by others.  When selling oil on behalf of royalty owners or working interest owners, the Company is acting as an agent and thus reports revenues on a net basis to the Company.  Fees and other deductions incurred prior to transfer of control are recorded as production costs.  Revenues are reported net of fees and other deductions incurred after transfer of control.



Electricity from the Company’s methane facility was sold on a long term contract.  There was no specific quantity of electricity that was required to be delivered under this contract.  Electricity passed through sales meters located at the Carter Valley landfill site, at which time control of the electricity transferred to the purchaser, the Company’s contractual obligation was satisfied, and revenues were recognizedThe Company sold its methane facility and generation assets on January 26, 2018 and therefore has not recognized revenues associated with any sales volumes after that date.  Revenues associated with the methane facility are included in Discontinued Operations.  (See Note 10. Discontinued Operations)



The Company operates certain salt water disposal wells, some of which accept water from third parties.  The contracts with the third parties primarily require a flat monthly fee for the third parties to dispose water into the wells.  In some cases, the contract is based on a per barrel charge to dispose water into the wells.  There is no requirement under the contracts for these third parties to use these wells for their water disposal.  If the third parties do dispose water into the Company operated wells during a given month, the Company has met its contractual obligations and revenues are recognized for that month.



The following table presents the disaggregated revenue by commodity for the three months and nine months ended September 30, 2019 and 2018 (in thousands):  









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

$

1,208 

 

$

1,647 

 

$

3,757 

 

$

4,472 

Saltwater disposal fees

 

 

 

 

 

 

20 

 

 

25 

Total

 

$

1,215 

 

$

1,654 

 

$

3,777 

 

$

4,497 



There were no natural gas imbalances at September 30, 2019 or December 31, 2018. 

Cash And Cash Equivalents

Cash and Cash Equivalents



Cash and cash equivalents include temporary cash investments with a maturity of ninety days or less at date of purchase.

Inventory

Inventory



Inventory consists of crude oil in tanks and is carried at lower of cost or market value.  The cost component of the oil inventory is calculated using the average cost per barrel for the three months ended September 30, 2019 and December 31, 2018.  These costs include production costs and taxes.  The market value component is calculated using the average September 2019 and December 2018 oil sales prices received from the Company’s Kansas properties.  In addition, at December 31, 2018, the Company recorded equipment and materials to be used in its Kansas operation as inventory and was carried at the lower of cost or market value.  The equipment inventory was sold to a third party during the three months ended March 31, 2019.  The cost component of the equipment and materials inventory represented the original cost paid for the equipment and materials.  The market component is based on estimated sales value for similar equipment and materials at the end of each period.  At September 30, 2019 and December 31, 2018, inventory consisted of the following (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Oil – carried at cost

 

$

325 

 

$

359 

Equipment and materials – carried at market

 

 

 —

 

 

105 

Total inventory

 

$

325 

 

$

464 



Full Cost Method Of Accounting

Full Cost Method of Accounting



The Company follows the full cost method of accounting for oil and gas property acquisition, exploration, and development activities.  Under this method, all costs incurred in connection with acquisition, exploration, and development of oil and gas reserves are capitalized.  Capitalized costs include lease acquisitions, seismic related costs, certain internal exploration costs, drilling, completion, and estimated asset retirement costs. The capitalized costs of oil and gas properties, plus estimated future development costs relating to proved reserves and estimated asset retirement costs which are not already included, net of estimated salvage value, are amortized on the unit-of-production method based on total proved reserves. The Company has determined its reserves based upon reserve reports provided by LaRoche Petroleum Consultants Ltd. since 2009. The costs of unproved properties are excluded from amortization until the properties are evaluated, subject to an annual assessment of whether impairment has occurred.  The Company had $0 in unevaluated properties as of September 30, 2019 and $23,000 at December 31, 2018.  Proceeds from the sale of oil and gas properties are accounted for as reductions to capitalized costs unless such sales cause a significant change in the relationship between costs and the estimated value of proved reserves, in which case a gain or loss is recognized.



At the end of each reporting period, the Company performs a “ceiling test” on the value of the net capitalized cost of oil and gas properties. This test compares the net capitalized cost (capitalized cost of oil and gas properties, net of accumulated depreciation, depletion and amortization and related deferred income taxes) to the present value of estimated future net revenues from oil and gas properties using an average price (arithmetic average of the beginning of month prices for the prior 12 months) and current cost discounted at 10%  plus cost of properties not being amortized and the lower of cost or estimated  fair value of unproven properties included in the cost being amortized (ceiling). If the net capitalized cost is greater than the ceiling, a write-down or impairment is required.  A write-down of the carrying value of the asset is a non-cash charge that reduces earnings in the current period.  Once incurred, a write-down may not be reversed in a later period.  The Company did not record any impairment of its oil and gas properties during the nine months ended September 30, 2019 and 2018.

Accounts Receivable

Accounts Receivable



Accounts receivable consist of uncollateralized joint interest owner obligations due within 30 days of the invoice date, uncollateralized accrued revenues due under normal trade terms, generally requiring payment within 30 days of sales of oil and gas production, and other miscellaneous receivables. No interest is charged on past-due balances. Payments made on accounts receivable are applied first to the earliest unpaid items. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible. There was no allowance recorded at September 30, 2019 or December 31, 2018.



The following table sets forth information concerning the Company’s accounts receivable (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Revenue

 

$

378 

 

$

396 

Tax

 

 

129 

 

 

129 

Joint interest

 

 

 

 

Accounts receivable - current

 

$

511 

 

$

533 



 

 

 

 

 

 

Tax - noncurrent

 

$

130 

 

$

130 

 

At September 30, 2019 and December 31, 2018, the Company recorded a tax related current receivable of $129,000 and a tax related non-current receivable of $130,000.  (See Note 2. Income Taxes) 

Reclassifications

Reclassifications



Certain prior year amounts have been reclassified to conform to current year presentation with no effect on net income.


Description Of Business And Significant Accounting Policies (Tables)
v3.19.3
Description Of Business And Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2019
Description Of Business And Significant Accounting Policies [Abstract]  
Disaggregation Of Revenue



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2019

 

2018

 

2019

 

2018



 

 

 

 

 

 

 

 

 

 

 

 

Crude oil

 

$

1,208 

 

$

1,647 

 

$

3,757 

 

$

4,472 

Saltwater disposal fees

 

 

 

 

 

 

20 

 

 

25 

Total

 

$

1,215 

 

$

1,654 

 

$

3,777 

 

$

4,497 



Inventory



 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Oil – carried at cost

 

$

325 

 

$

359 

Equipment and materials – carried at market

 

 

 —

 

 

105 

Total inventory

 

$

325 

 

$

464 



Accounts Receivable



 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Revenue

 

$

378 

 

$

396 

Tax

 

 

129 

 

 

129 

Joint interest

 

 

 

 

Accounts receivable - current

 

$

511 

 

$

533 



 

 

 

 

 

 

Tax - noncurrent

 

$

130 

 

$

130 




Description Of Business And Significant Accounting Policies (Narrative) (Details)
v3.19.3
Description Of Business And Significant Accounting Policies (Narrative) (Details) - USD ($)
9 Months Ended
Jan. 26, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Description Of Business And Significant Accounting Policies [Line Items]        
Unevaluated properties   $ 0   $ 23,000
Impairment   0 $ 0  
Sale of methane facility assets $ 2,650,000      
Accounts receivable - current   511,000   533,000
Allowance for doubtful accounts   0    
Tax [Member]        
Description Of Business And Significant Accounting Policies [Line Items]        
Accounts receivable - current   129,000   129,000
Accounts receivable - noncurrent   $ 130,000   $ 130,000

Description Of Business And Significant Accounting Policies (Disaggregation Of Revenue) (Details)
v3.19.3
Description Of Business And Significant Accounting Policies (Disaggregation Of Revenue) (Details) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Disaggregation of Revenue [Line Items]          
Revenue $ 1,215,000 $ 1,654,000 $ 3,777,000 $ 4,497,000  
Crude Oil [Member]          
Disaggregation of Revenue [Line Items]          
Revenue 1,208,000 1,647,000 3,757,000 4,472,000  
Saltwater Disposal Fees [Member]          
Disaggregation of Revenue [Line Items]          
Revenue $ 7,000 $ 7,000 20,000 $ 25,000  
Natural Gas Imbalances [Member]          
Disaggregation of Revenue [Line Items]          
Revenue     $ 0   $ 0

Description Of Business And Significant Accounting Policies (Inventory) (Details)
v3.19.3
Description Of Business And Significant Accounting Policies (Inventory) (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Description Of Business And Significant Accounting Policies [Abstract]    
Oil - carried at cost $ 325 $ 359
Equipment and materials - carried at market   105
Total inventory $ 325 $ 464

Description Of Business And Significant Accounting Policies (Accounts Receivable) (Details)
v3.19.3
Description Of Business And Significant Accounting Policies (Accounts Receivable) (Details) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Accounts receivable - current $ 511,000 $ 533,000
Revenue [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Accounts receivable - current 378,000 396,000
Tax [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Accounts receivable - current 129,000 129,000
Accounts receivable - noncurrent 130,000 130,000
Joint Interest [Member]    
Accounts, Notes, Loans and Financing Receivable [Line Items]    
Accounts receivable - current $ 4,000 $ 8,000

Income Taxes
v3.19.3
Income Taxes
9 Months Ended
Sep. 30, 2019
Income Taxes [Abstract]  
Income Taxes

(2)  Income Taxes



Income taxes are reported in accordance with U.S. GAAP, which requires the establishment of deferred tax accounts for all temporary differences between the financial reporting and tax bases of assets and liabilities, using currently enacted federal and state income tax rates.  In addition, deferred tax accounts must be adjusted to reflect new rates if enacted into law.



The deferred income tax assets or liabilities for an oil and gas exploration and development company are dependent on many variables such as estimates of the economic lives of depleting oil and gas reserves and commodity prices.  Accordingly, the asset or liability is subject to continuous recalculation and revision of the numerous estimates required, and may change significantly in the event of occurrences such as major acquisitions, divestitures, commodity price changes, changes in reserve estimates, changes in reserve lives, and changes in tax rates or tax laws.



The estimated annual effective tax rate of 0% differs from the statutory rate of 21% due primarily to adjustments to the valuation allowance on the deferred tax assets.



At December 31, 2018, federal net operating loss carryforwards amounted to approximately $35.8 million, of which $34.8 million expires between 2019 and 2037, which can offset 100% of taxable income and $1 million that has an indefinite carryforward period which can offset 80% of taxable income per year.  The Company has approximately $260,000 in refundable credits, and it expects that a substantial portion will be refunded between 2018 and 2021.  As 50% of the credit will be refunded when we file the 2018 tax return, this amount is recorded as a current accounts receivable on the Balance Sheet at September 30, 2019 and December 31, 2018, with balance of this refund recorded as a non-current accounts receivable.  The Company recorded a valuation allowance on the remaining deferred tax assets at September 30, 2019 and December 31, 2018 as such amounts were not considered to be more-likely-than-not realizable.  There were no recorded unrecognized tax benefits at September 30, 2019 and December 31, 2018. 

 


Income Taxes (Narrative) (Details)
v3.19.3
Income Taxes (Narrative) (Details) - USD ($)
9 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Income Taxes [Line Items]    
Unrecognized tax benefits $ 0 $ 0
Federal net operating loss carryforwards   35,800,000
Federal tax rate 21.00%  
Refundable credits   260,000
Estimated annual effective tax rate 0.00%  
Tax Period Between 2019 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards   34,800,000
Indefinite Tax Period [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards   $ 1,000,000
Minimum [Member] | Tax Period Between 2019 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards expiration between, years Jan. 01, 2019  
Maximum [Member] | Tax Period Between 2019 And 2037 [Member]    
Income Taxes [Line Items]    
Federal net operating loss carryforwards expiration between, years Dec. 31, 2037  

Capital Stock
v3.19.3
Capital Stock
9 Months Ended
Sep. 30, 2019
Capital Stock [Abstract]  
Capital Stock

(3) Capital Stock

Common Stock

On July 1, 2019, the Company issued 4,887 shares of common stock in the aggregate to the Company’s three directors and CFO and interim CEO.

On October 1, 2019, the Company issued 5,225 shares of common stock in the aggregate to the Company’s three directors and CFO and interim CEO.



Rights Agreement

Effective March 17, 2017 the Board of Directors declared a dividend of one right (a “Right”) for each of the Company’s issued and outstanding shares of common stock, $0.001 par value per share (“Common Stock”). The dividend was paid to the stockholders of record at the close of business on March 27, 2017 (the “Record Date”). Each Right entitles the registered holder, subject to the terms of the Rights Agreement dated as of March 16, 2017 (the “Rights Agreement”) between the Company and the Rights Agent, Continental Stock Transfer & Trust Company, to purchase from the Company one one-thousandth of a share of the Company’s Series A Preferred Stock at a price of $1.10 (the “Exercise Price”), subject to certain adjustments.

The purpose of the Rights Agreement is to reduce the risk that the Company’s ability to use its net operating losses to reduce potential future federal income tax obligations would be limited if the Company’s experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code. A company generally experiences an ownership change if the percentage of its stock owned by its “5-percent shareholders,” as defined in Section 382 of the Tax Code, increases by more than 50 percentage points over a rolling three-year period. The Rights Agreement is designed to reduce the likelihood that the Company will experience an ownership change under Section 382 of the Tax Code by discouraging any person or group from becoming a 4.95% shareholder and also discouraging any existing 4.95% (or more) shareholder from acquiring additional shares of the Company’s stock.

The Rights will not be exercisable until the “Distribution Date”, which is generally defined as the earlier to occur of:(i) a public announcement or filing that a person or group has, become an “Acquiring Person” which is defined as a person or group of affiliated or associated persons or persons acting in concert who, at any time after the date of the Rights Agreement, have acquired, or obtained the right to acquire, beneficial ownership of 4.95% or more of the Company’s outstanding shares of Common Stock; or a person or group currently owning 4.95% (or more) of the Company’s outstanding shares acquires additional shares of the Company’s stock; subject to certain exceptions; or (ii) the commencement of, or announcement of an intention to commence, a tender offer or exchange offer the consummation of which would result in any person becoming an Acquiring Person. 

The Rights, unless extended by the Board of Directors will expire prior to the earlier of March 16, 2020; or a date the Board of Directors determines by resolution in its business judgment that the Agreement is no longer necessary or appropriate; or in certain other specified circumstances.

At any time after any person or group of affiliated or associated persons becomes an Acquiring Person, the Board, at its option, may exchange each Right (other than Rights owned by such person or group of affiliated or associated persons which will have become void), in whole or in part, at an exchange ratio of two shares of Common Stock per outstanding Right (subject to adjustment).

For further information on the Rights Agreement, please refer to the Rights Agreement that was attached in full as an exhibit to the Company’s Form 8-K filed with SEC on March 17, 2017.



Preferred Stock

Series A Preferred Stock has a par value of $0.0001 and 10,000 shares have been designated.  No shares of Series A Preferred Stock have been issued by the Company pursuant to the Rights Agreement described above or otherwise.


Capital Stock (Narrative) (Details)
v3.19.3
Capital Stock (Narrative) (Details)
9 Months Ended
Oct. 01, 2019
item
shares
Jul. 01, 2019
item
shares
Mar. 17, 2017
$ / shares
Sep. 30, 2019
$ / shares
shares
Dec. 31, 2018
$ / shares
shares
Mar. 16, 2017
$ / shares
Capital Stock [Line Items]            
Common stock, par value | $ / shares     $ 0.001 $ 0.001 $ 0.001  
Number of directors | item   3        
Preferred stock, shares authorized       25,000,000 25,000,000  
Rights Plan [Member]            
Capital Stock [Line Items]            
Number of preferred share purchase right for each outstanding share of its common stock to shareholder | $ / shares     $ 1      
Common stock, Threshold for exercise of rights percentage     4.95%      
Subsequent Event [Member]            
Capital Stock [Line Items]            
Number of directors | item 3          
Right [Member]            
Capital Stock [Line Items]            
Date declared       Mar. 17, 2017    
Date to be paid       Mar. 27, 2017    
Date of record       Mar. 16, 2017    
Directors, CFO And Interim CEO [Member]            
Capital Stock [Line Items]            
Common stock, New shares issued   4,887        
Directors, CFO And Interim CEO [Member] | Subsequent Event [Member]            
Capital Stock [Line Items]            
Common stock, New shares issued 5,225          
Series A Preferred Stock [Member]            
Capital Stock [Line Items]            
Preferred stock, par value | $ / shares       $ 0.0001 $ 0.0001  
Preferred stock, shares issued       0 0  
Preferred stock, shares authorized       10,000 10,000  
Dividends conversion ratio       0.001    
Exercise price | $ / shares           $ 1.10
Series A Preferred Stock [Member] | Rights Plan [Member]            
Capital Stock [Line Items]            
Preferred stock, shares issued       0    

Earnings Per Common Share
v3.19.3
Earnings Per Common Share
9 Months Ended
Sep. 30, 2019
Earnings Per Common Share [Abstract]  
Earnings Per Common Share

(4)  Earnings per Common Share



We report basic earnings per common share, which excludes the effect of potentially dilutive securities, and diluted earnings per common share which include the effect of all potentially dilutive securities unless their impact is anti-dilutive. The following are reconciliations of the numerators and denominators of our basic and diluted earnings per share, (in thousands except for share and per share amounts):







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2019

 

2018

 

2019

 

2018

Income (numerator):

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(182)

 

$

298 

 

$

(269)

 

$

530 

Net income from discontinued operations

 

$

 —

 

$

 —

 

$

 —

 

$

1,120 

Weighted average shares (denominator):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares – basic

 

 

10,653,550 

 

 

10,624,493 

 

 

10,648,838 

 

 

10,624,476 

Dilution effect of share-based compensation, treasury method

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Weighted average shares – dilutive

 

 

10,653,550 

 

 

10,624,493 

 

 

10,648,838 

 

 

10,624,476 

Income (loss) per share – basic and dilutive:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.02)

 

$

0.03 

 

$

(0.03)

 

$

0.05 

Discontinued operations

 

$

 —

 

$

 —

 

$

 —

 

$

0.11 



Options issued to the Company’s directors in which the exercise price was higher than the average market price each quarter were excluded from diluted shares as they would have been anti-dilutive.  In addition, the shares that would be issued to employees and Company directors if the thirty day trailing average of WTI postings as published by the U.S. Energy Information Administration meets or exceeds $85 per barrel have also been excluded from this calculation.  (See Note 12. Commitments and Contingencies)


Earnings Per Common Share (Tables)
v3.19.3
Earnings Per Common Share (Tables)
9 Months Ended
Sep. 30, 2019
Earnings Per Common Share [Abstract]  
Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

For the Three Months Ended

 

For the Nine Months Ended



 

September 30,

 

September 30,



 

2019

 

2018

 

2019

 

2018

Income (numerator):

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

(182)

 

$

298 

 

$

(269)

 

$

530 

Net income from discontinued operations

 

$

 —

 

$

 —

 

$

 —

 

$

1,120 

Weighted average shares (denominator):

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares – basic

 

 

10,653,550 

 

 

10,624,493 

 

 

10,648,838 

 

 

10,624,476 

Dilution effect of share-based compensation, treasury method

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Weighted average shares – dilutive

 

 

10,653,550 

 

 

10,624,493 

 

 

10,648,838 

 

 

10,624,476 

Income (loss) per share – basic and dilutive:

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.02)

 

$

0.03 

 

$

(0.03)

 

$

0.05 

Discontinued operations

 

$

 —

 

$

 —

 

$

 —

 

$

0.11 




Earnings Per Common Share (Narrative) (Details)
v3.19.3
Earnings Per Common Share (Narrative) (Details)
9 Months Ended
Sep. 30, 2019
$ / bbl
Derivative [Line Items]  
Period of trailing average of WTI 30 days
Minimum [Member] | West Texas Intermediate [Member]  
Derivative [Line Items]  
Compensation reimbursement 85

Earnings Per Common Share (Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share) (Details)
v3.19.3
Earnings Per Common Share (Reconciliations Of The Numerators And Denominators Of Basic And Diluted Earnings Per Share) (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Earnings Per Common Share [Abstract]        
Net income (loss) from continuing operations $ (182) $ 298 $ (269) $ 530
Net income from discontinued operations       $ 1,120
Weighted average shares - basic 10,653,550 10,624,493 10,648,838 10,624,476
Dilution effect of share-based compensation, treasury method
Weighted average shares - dilutive 10,653,550 10,624,493 10,648,838 10,624,476
Continuing operations $ (0.02) $ 0.03 $ (0.03) $ 0.05
Discontinued operations       $ 0.11

Recent Accounting Pronouncements
v3.19.3
Recent Accounting Pronouncements
9 Months Ended
Sep. 30, 2019
Recent Accounting Pronouncements [Abstract]  
Recent Accounting Pronouncements

(5)  Recent Accounting Pronouncements



In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842).  This guidance was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Early application of the amendments was permitted for all entities.  The Company has identified each of its leases and determined the impact of this new guidance on each of the identified leases.  The Company implemented ASU 2016-02 Leases (Topic 842) as of January 1, 2019 using the modified retrospective approach.  As a result of this implementation, the Company recorded right-of-use assets and liabilities associated with operating leases of approximately $98,000.  There was no transition adjustment related to finance leases.



The Company elected the package of practical expedients within ASU 2016-02 Leases (Topic 842) that allows an entity to not reassess, prior to the effective date, (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification of any expired or existing leases, or (iii) initial direct costs for any existing leases.  Additionally, the Company elected the practical expedient to not evaluate existing or expired land easements not previously accounted for as leases prior to the effective date.  The Company also made an account policy election not to apply the lease recognition requirements to leases with an initial term of 12 months or less.



 


Recent Accounting Pronouncements (Narrative) (Details)
v3.19.3
Recent Accounting Pronouncements (Narrative) (Details)
Sep. 30, 2019
USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Operating lease, Right-of-use asset $ 55,000
Accounting Standards Update 2016-02 [Member]  
New Accounting Pronouncements or Change in Accounting Principle [Line Items]  
Operating lease, Right-of-use asset 98,000
Finance Lease, Right-of-Use Asset $ 0

Related Party Transactions
v3.19.3
Related Party Transactions
9 Months Ended
Sep. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions

(6) Related Party Transactions



On September 17, 2007, Hoactzin Partners, L.P. (“Hoactzin”) subscribed to a drilling program offered by the Company consisting of wells to be drilled on the Company’s Kansas Properties (the “Program”).  Peter E. Salas, the Chairman of the Board of Directors of the Company, is the controlling person of Hoactzin and of Dolphin Offshore Partners, L.P., the Company’s largest shareholder.  Hoactzin was also conveyed a net profits interest in the MMC facility at the Carter Valley municipal solid waste landfill owned and operated by Republic Services, Inc. in Church Hill, Tennessee where the Company installed a propriety combination of advanced gas treatment technology to extract the methane component of the purchased gas stream (the “Methane Project”).  As a result of the startup costs, monthly operating expenses, and gas production levels experienced, no net profits as defined were realized during the period from startup in April, 2009 through January 26, 2018 (the date the Company sold the Methane Project to a third party, and the net profits interest of Hoactzin terminated).  Consequently, no payment to Hoactzin were made under the net profits interest at any time.  In addition, during the fourth quarter of 2018, the Company acquired all of Hoactzin’s working interest in the drilling program wells for $134,690.



On December 18, 2007, the Company entered into a Management Agreement with Hoactzin to manage on behalf of Hoactzin all of its working interest in certain oil and gas properties owned by Hoactzin and located in the onshore Texas Gulf Coast, and offshore Texas and offshore Louisiana. As part of the consideration for the Company’s agreement to enter into the Management Agreement, Hoactzin granted to the Company an option to participate in up to a 15% working interest on a dollar for dollar cost basis in any new drilling or workover activities undertaken on Hoactzin’s managed properties during the term of the Management Agreement.  The Management Agreement expired on December 18, 2012. 



The Company entered into a transition agreement with Hoactzin effective December 18, 2012 whereby the Company no longer performs operations, but administratively assists Hoactzin in becoming operator of record of these wells and transferring all bonds from the Company to Hoactzin.  This assistance is primarily related to signing the necessary documents to effectuate this transition.  Hoactzin and its controlling member are indemnifying the Company for any costs or liabilities incurred by the Company resulting from such assistance or the fact that the Company is the operator of record on certain of these wells.  As of the date of this Report, the Company continues to administratively assist Hoactzin with this transition process.

 


Related Party Transactions (Narrative) (Details)
v3.19.3
Related Party Transactions (Narrative) (Details) - USD ($)
3 Months Ended 9 Months Ended 100 Months Ended
Dec. 18, 2007
Dec. 31, 2018
Sep. 30, 2019
Jan. 31, 2018
Related Party Transaction [Line Items]        
Working interest percent 15.00%      
Payments to acquire interest in the drilling program wells   $ 134,690    
Hoactzin Partners, L.P. [Member] | Methane Project [Member]        
Related Party Transaction [Line Items]        
Net profits     $ 0 $ 0

Oil And Gas Properties
v3.19.3
Oil And Gas Properties
9 Months Ended
Sep. 30, 2019
Oil And Gas Properties [Abstract]  
Oil And Gas Properties



(7)  Oil and Gas Properties



The following table sets forth information concerning the Company’s oil and gas properties (in thousands):







 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Oil and gas properties

 

$

6,574 

 

$

6,503 

Unevaluated properties

 

 

 —

 

 

23 

Accumulated depreciation, depletion, and amortization

 

 

(2,230)

 

 

(1,722)

Oil and gas properties, net

 

$

4,344 

 

$

4,804 



The Company recorded depletion expense of $504,000 and $546,000 for the nine months ended September 30, 2019 and 2018, respectively.  During the nine months ended September 30, 2019 and 2018, the Company also recorded in “Accumulated depreciation, depletion, and amortization” a $4,000 gain on asset retirement obligations and an $8,000 gain on asset retirement obligations, respectively.

 


Oil And Gas Properties (Tables)
v3.19.3
Oil And Gas Properties (Tables)
9 Months Ended
Sep. 30, 2019
Oil And Gas Properties [Abstract]  
Schedule Of Oil And Gas Properties



 

 

 

 

 

 



 

 

 

 

 

 



 

September 30,

 

December 31,



 

2019

 

2018

Oil and gas properties

 

$

6,574 

 

$

6,503 

Unevaluated properties

 

 

 —

 

 

23 

Accumulated depreciation, depletion, and amortization

 

 

(2,230)

 

 

(1,722)

Oil and gas properties, net

 

$

4,344 

 

$

4,804 




Oil And Gas Properties (Narrative) (Details)
v3.19.3
Oil And Gas Properties (Narrative) (Details) - USD ($)
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Oil And Gas Properties [Abstract]    
Depletion expense $ 504,000 $ 546,000
Gain (loss) on asset retirement obligations $ 4,000 $ 8,000

Oil And Gas Properties (Schedule Of Oil And Gas Properties) (Details)
v3.19.3
Oil And Gas Properties (Schedule Of Oil And Gas Properties) (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Oil And Gas Properties [Abstract]    
Oil and gas properties $ 6,574 $ 6,503
Unevaluated properties 23
Accumulated depreciation, depletion, and amortization (2,230) (1,722)
Oil and gas properties, net $ 4,344 $ 4,804

Asset Retirement Obligation
v3.19.3
Asset Retirement Obligation
9 Months Ended
Sep. 30, 2019
Asset Retirement Obligation [Abstract]  
Asset Retirement Obligation



(8)  Asset Retirement Obligation



Our asset retirement obligations represent the estimated present value of the amount we will incur to plug, abandon, and remediate our producing properties at the end of their productive lives in accordance with applicable laws. The following table summarizes the Company’s Asset Retirement Obligation transactions for the nine months ended September 30, 2019 (in thousands):







 

 

 



 

 

 

Balance December 31, 2018

 

$

2,179 

Accretion expense

 

 

100 

Liabilities incurred

 

 

 —

Liabilities settled

 

 

(56)

Liabilities relieved - sold properties

 

 

(55)

Balance September 30, 2019

 

$

2,168 

 


Asset Retirement Obligation (Tables)
v3.19.3
Asset Retirement Obligation (Tables)
9 Months Ended
Sep. 30, 2019
Asset Retirement Obligation [Abstract]  
Asset Retirement Obligation Transactions



 

 

 



 

 

 

Balance December 31, 2018

 

$

2,179 

Accretion expense

 

 

100 

Liabilities incurred

 

 

 —

Liabilities settled

 

 

(56)

Liabilities relieved - sold properties

 

 

(55)

Balance September 30, 2019

 

$

2,168 




Asset Retirement Obligation (Asset Retirement Obligation Transactions) (Details)
v3.19.3
Asset Retirement Obligation (Asset Retirement Obligation Transactions) (Details) - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Asset Retirement Obligation [Abstract]    
Balance $ 2,179  
Accretion expense 100 $ 106
Liabilities incurred  
Liabilities settled (56)  
Liabilities relieved - sold properties