Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of effective income tax rate reconciliation

The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate (35%) on operations due primarily to permanent differences attributable to organizational expenses.

	Fiscal Year Ended December 31, 2015			Fiscal Year Ended December 31, 2014

Income tax expense computed at statutory rates	$	(649,815	)	$	(603,209	)
Non-deductible items		66,313			468,253
Change in valuation allowance		583,502			134,956

Total	$	—		$	—

Schedule of deferred tax assets and liabilities

The components of the net deferred tax asset were as follows:

	December 31, 2014
	Gross Values				Tax Effect
Deferred tax assets
Book Impairment	$	—		$	—
Net operating loss carryforwards		4,235,227			1,482,329
Asset retirement obligation		—			—
Other		—			—
Total deferred tax assets		4,235,227			1,482,329

Deferred tax liabilities
O&G Properties		(1,631,976	)		(571,192	)
Other		—			—
Total deferred tax liabilities		(1,631,976	)		(571,192	)
Less: Valuation allowance		(2,603,251	)		(911,137	)
Net deferred tax assets (liabilities)	$	—		$	—

	December 31, 2015
		Gross Values			Tax Effect
Deferred tax assets
Book Impairment	$	668,073		$	233,826
Net operating loss carryforwards		5,911,319			1,742,830
Asset retirement obligation		—			—
Other		—			—
Total deferred tax assets		6,579,392			1,976,656

Deferred tax liabilities
O&G Properties		(2,211,892	)		(774,162	)
Other		—			—
Total deferred tax liabilities		(2,211,892	)		(774,162	)
Less: Valuation allowance		(4,367,500	)		(1,202,494	)
Net deferred tax assets (liabilities)	$	—		$	—