CITADEL EXPLORATION, INC. Overview
Our revenues, profitability and future growth depend substantially on prevailing prices for oil and natural gas and our ability to find, develop and acquire oil and gas reserves that are economically recoverable.
Our Operations
Our principal strategy is to focus on the acquisition of oil and natural gas
mineral leases that have known hydrocarbons or are in close proximity to known
hydrocarbons that have been underdeveloped. Once acquired, we strive to
implement an accelerated development program utilizing capital resources, a
regional operating focus, an experienced management and technical team, and
enhanced recovery technologies to attempt to increase production and increase
returns for our stockholders. Our oil and natural gas acquisition and
development activities are currently focused in the
On
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In December of 2015,
In July of 2016,
In December of 2017,
In the first quarter of 2019,
On
In the third quarter of 2019, the Company did not perform any cyclic steaming operations due to a lack of capital. As such field wide production has dropped to below 10 barrels per day.
On
On
Going Concern
The consolidated financial statements included in this filing have been prepared
in conformity with generally accepted accounting principles that contemplate the
continuance of the Company as a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. As shown on the accompanying consolidated financial statements, the
Company has incurred an accumulated deficit and working capital deficit in the
amount of
The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its oil and gas business opportunities.
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RESULTS OF OPERATIONS
Results of Operations for the Three and Nine Months Ended
During the three-month period ended
Operating expenses totaled
General and administrative expenses decreased from
Depreciation, depletion and amortization decreased from
Professional fees decreased from
Executive compensation decreased from
Liquidity and Capital Resources
The Company does not currently have a capital budget as it does not have authority to operate the Kern Bluff Oil Field.
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As of
The following table sets forth a summary of our cash flows for the nine months
ended
Nine Months Ended
September 30,
2019 2018
Net cash used in operating activities $ (207,430 ) $ (529,037 )
Net cash used in investing activities (26,704 ) (1,258,533 )
Net cash provided by financing activities 153,434 1,322,848 Net change in cash and restricted cash
(80,700 ) (464,722 )
Cash and restricted cash, beginning of period 286,441 972,103
Cash and restricted cash, end of period
Operating activities
The net loss in the period was greater than the non-cash adjustments to reconcile the changes in the consolidated balance sheet and consolidated statement of operations, which is the reason cash used in operating activities was negative.
Investing activities
The net cash used in investing activities consisted of drilling expenses and
facility upgrades on oil and gas properties of
Financing activities
The net cash provided by financing activities for the three- and nine-month
period ended
The Company made payments of
As of
Without cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, implementation of our strategy to successfully develop our Kern Bluff Oil Field, and/or acquisitions we may decide to pursue. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.
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Our ability to obtain additional capital through additional equity and/or debt financing, and Joint Venture or Working Interest partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and develop our assets.
Contractual Obligations
An operating lease for rental office space was entered into beginning
Off-Balance Sheet Arrangements
As of the date of this report, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Operation Plan
Our plan is to focus on the acquisition and drilling of prospective oil and
natural gas mineral leases. Once we have tested a prospect as productive,
subject to availability of capital, we will implement a development program with
a regional operating focus in order to increase production and increase returns
for our stockholders. Exploration, acquisition and development activities are
currently focused in
We expect to achieve these results by:
• Investing capital in exploration and development drilling and in
secondary and tertiary recovery of oil as well as natural gas;
• Using the latest technologies available to the oil and natural gas
industry in our operations;
• Finding additional oil and natural gas reserves on the properties we acquire.
In addition to raising additional capital we plan to take on Joint Venture (JV) or Working Interest (WI) partners who may contribute to the capital costs of drilling and completion and then share in revenues derived from production. This economic strategy may allow us to utilize our own financial assets toward the growth of our leased acreage holdings, pursue the acquisition of strategic oil and gas producing properties or companies and generally expand our existing operations.
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Our future financial results will depend primarily on: (i) the ability to continue to source and screen potential projects; (ii) the ability to discover commercial quantities of natural gas and oil; (iii) the market price for oil and natural gas; and (iv) the ability to fully implement our exploration and development program, which is dependent on the availability of capital resources. There can be no assurance that we will be successful in any of these respects, that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production, or that we will be able to obtain additional funding to increase our currently limited capital resources.
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