Quarterly report pursuant to Section 13 or 15(d)

PROPERTY AND EQUIPMENT

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PROPERTY AND EQUIPMENT
6 Months Ended
Sep. 30, 2019
Property and Equipment  
PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

 

Oil and Gas Properties

 

Camber uses the full cost method of accounting for oil and natural gas producing activities. Costs to acquire mineral interests in oil and natural gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized.

 

Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and natural gas property costs on a country-by-country basis. Costs not subject to amortization consist of unproved properties that are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Camber assesses overall values of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management’s intention with regard to future development of individually significant properties and the ability of Camber to obtain funds to finance their programs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

 

Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.

 

Costs of oil and natural gas properties are amortized using the units of production method. Amortization expense calculated per equivalent physical unit of production amounted to $0.95 and $4.45 per barrel of oil equivalent for the six months ended September 30, 2019 and 2018, respectively.

 

All of Camber’s oil and natural gas properties are located in the United States. Costs being amortized at September 30, 2019 and March 31, 2019 are as follows:

 

    At
September 30, 2019
  At
March 31, 2019
 
 Oil and gas properties subject to amortization   $ 50,352,304   $ 50,352,304  
 Oil and gas properties not subject to amortization     28,016,989     28,016,989  
 Capitalized asset retirement costs     136,632     176,649  
 Total oil & natural gas properties     78,505,925     78,545,944  
 Accumulated depreciation, depletion, and impairment     (78,340,200   (78,333,628 )
 Net Capitalized Costs   $ 165,725   $ 212,316  

 

Impairments

 

For the six months ended September 30, 2019, the Company recorded no impairments. For the six months ended September 30, 2018, the Company recorded impairments totaling $755,966 which were due to lease expirations. 

 

Additions and Depletion

 

During the six months ended September 30, 2019 and 2018, the Company incurred costs of $0 and $2,482,788, respectively, for technical and other capital enhancements to extend the lives of the Company’s wells. Additionally, the Company recorded $6,572 and $458,939 for depletion for the six months ended September 30, 2019 and 2018, respectively.

 

Disposition of Oil and Natural Gas Properties

 

On July 12, 2018, the Company entered into an Asset Purchase Agreement (as amended by the First Amendment to the Sale Agreement dated August 3, 2018 and the Second Amendment to Sale Agreement dated September 24, 2018, the “Sale Agreement”), as seller, with N&B Energy as purchaser, which entity is affiliated with Richard N. Azar II, the Company’s former Chief Executive Officer and former director, and Donnie B. Seay, the Company’s former director. Pursuant to the Sale Agreement, the Company agreed to sell to N&B Energy a substantial portion of its assets, including all of the assets acquired pursuant to the terms of the December 31, 2015 Asset Purchase Agreement and certain other more recent acquisitions, other than the production payment and overriding royalty interests discussed below (the “Disposed Assets”). In consideration for the Disposed Assets, N&B Energy agreed to pay the Company $100 in cash, to assume all of the Company’s obligations and debt owed under its outstanding loan agreement with IBC Bank, which had a then outstanding principal balance of approximately $36.9 million, and certain other parties agreed to enter into a settlement agreement. The transaction closed in September 2018.

 

Properties and Equipment

 

Property and equipment are summarized as follows:

 

    At September 30,   At March 31,
    2019   2019
         
 Furniture and fixtures   $ 9,847     $ 1,570  
 Information systems     48,392       —    
 Construction equipment     2,387,943       —    
 Autos, trucks and trailers     2,789,017       —    
Total cost     5,235,199       1,570  
 Accumulated depreciation     (3,234,448 )     (696 )
Net book value   $ 2,000,751     $ 874  

 

Additions and Depreciation for Property and Equipment

 

During the three and six months ended September 30, 2019, the Company incurred costs of $628,087 for purchases of property and equipment. Additionally, the Company recorded $65,000 and $65,130 of depreciation during the three and six months ended September 30, 2019, respectively.