Annual report pursuant to Section 13 and 15(d)

NOTE 11. INCOME TAXES (Tables)

NOTE 11. INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

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, 2016			Fiscal Year Ended December 31, 2015

Income tax expense computed at statutory rates	$	(656,523	)	$	(649,815	)
Non-deductible items		219,438			66,313
Change in valuation allowance		437,085			583,502

Total	$	—		$	—

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

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

	December 31, 2015
	Gross Values				Tax Effect
Deferred tax assets
Book impairment	$	668,073		$	$	233,826
Net operating loss carryforwards		5,911,319				2,068,962
Asset retirement obligation		—				—
Other		—				—
Total deferred tax assets		6,579,392				2,302,788

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	)			(1,528,626	)
Net deferred tax assets (liabilities)	$	—		$	$	—

	December 31, 2016
	Gross Values			Tax Effect
Deferred tax assets				$
Book Impairment	$	668,073		$	233,825
Net operating loss carryforwards		7,120,879			2,492,308
Asset retirement obligation		—			—
Other		—			—
Total deferred tax assets		7,788,952			2,726,133

Deferred tax liabilities
O&G Properties		(6,496,717	)		(2,273,851	)
Other		—			—
Total deferred tax liabilities		(6,496,717	)		(2,273,851	)
Less: Valuation allowance		(1,292,235	)		(452,282	)
Net deferred tax assets (liabilities)	$	—		$	—