OKMIN RESOURCES INC
For the period ended Mar 31, 2024. Filed Jun 26, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed Jun 26, 2024
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-14.
0001079973-24-000257
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-06-26.
0001079973-24-000966
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 74 previous paragraphs and 72 current paragraphs.
49 unchanged; 16 reworded; 6 added; 9 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
The Company and SPO had previously entered into a gas gathering agreement in June 2023 in an effort to restore and ultimately improve gas flows into the gas transit pipeline system. SPO has been working to upgrade the gas gathering system on the property, including replacing older gas gathering lines with new modern lines. The older lines were discovered to contain numerous leaks which likely contributed to the lack of throughput to the compressor station. For the nine months ended March 31, 2024, the Company’s expenditures at West Sheppard Pool were $14,594.
Current report
General and administrative expenses increased to $103,894 for the three months ended March 31, 2024 compared to $68,830 for the three months ended March 31, 2023, This increase is attributable to the Company recording additional legal and professional fees that we did not have in the previous corresponding quarter. Other expenses related to compensation, interest, rent, accounting and professional fees and other general and administrative expenses necessary for our operations.
Current report
For the Nine months ended March 31, 2024, as compared to the Nine months ended March 31, 2023
Current report
General and administrative expenses decreased slightly to $299,772 for the nine months ended March 31, 2024 as compared to $306,068 for the nine months ended March 31, 2023. During the nine months ended March 31, 2024, of note we recorded the following expenses as compared to the corresponding period in 2023: Interest expense was lower at $12,435 vs $15,057; listing related fees were lower at $16,380 vs. $26,912; legal fees were higher at $45,000 vs $11,972 as we engaged ongoing counsel on a more regular basis; audit fees were lower $18,700 vs $19,200; consultants and other professional fees were $67,208 vs $74,221 and depreciation was slightly higher at $3,835 vs. $2,732. Other expenses related to compensation, filing and transfer agent fees, rent and other general and administrative expenses necessary for our operations.
Current report
The net loss for the nine months ended March 31, 2024 was $324,814 compared to a net loss of $431,478 for the nine months ended March 31, 2023. The Expenses during the nine month period ended March 31, 2024, included: $81,078 in lease operating expenses (including taxes and royalties), $121,500 in compensation (of which only $20,250 was paid, with the remainder being accrued as a payable) and other general and administrative expenses necessary for our operations. The Expenses during the comparative nine month period ended March 31, 2023 were higher, as during that period the Company was conducting more development and rework activities on its properties, which amounted to $223,517 in lease operating expenses (including taxes and royalties).
Current report
Net cash (used) from financing
Removed paragraphs (9)
Previous report
Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Okmin Resources, Inc. and its subsidiaries.
Previous report
SPO has been utilizing its knowledge and expertise of the greater area to conduct further improvements on the West Sheppard Pool leases, though to date gas sales have not resumed. Recent work has included trenching and replacing gas gathering lines as numerous leaks were discovered in the older lines, which likely contributed to the lack of throughput to the compressor station. In the six months ended December 31, 2023, the Company’s expenditures at West Sheppard Pool were $7,094.
Previous report
In the six months ended December 31, 2023, the Company recorded expenditures at West Sheppard Pool of $7,094.
Previous report
As a result of the suspended activities, in the six months ended December 31, 2023, the Company recorded no revenues from the project compared to revenues for the six months ending December 31, 2022 of $1,948.
Previous report
General and administrative expenses decreased to $90,951 for the three months ended December 31, 2023 as compared to $120,570 for the three months ended December 31, 2022. During the current three-month period, amounts paid to consultants and professional fees declined while the prior year’s period also included one-time costs related to the Company’s transition from its start-up phase into greater operations.
Previous report
For the Six months ended December 31, 2023, as compared to the Six months ended December 31, 2022
Previous report
General and administrative expenses decreased to $195,878 for the six months ended December 31, 2023 as compared to $237,237 for the six months ended December 31, 2022. This decrease is attributable lower consulting and professional fees in the current six months. The prior year’s period also included one-time costs as the Company moved from its start-up phase into higher levels of operations.
Previous report
The net loss for the six months ended December 31, 2023 was $203,687 compared to a net loss of $292,760 for the six months ended December 31, 2022. The Expenses during the six month period ended December 31, 2023, included $55,649 in lease operating expenses, including taxes and royalties; $82,500 in compensation (of which only $21,750 has been paid, with the remainder being accrued as a payable); $8,469 in interest expense; $48,490 in audit, legal and professional fees; $7,980 in listing related fees; and non-cash amounts of $15,130 and $25,288 in connection with personnel and corporate and investor relations consultants. We also incurred other general and administrative expenses necessary for our operations. The Expenses during the comparative six month period ended December 31, 2022, included $125,011 in lease operating expenses, including taxes and royalties; $81,000 in compensation; $10,400 in interest expense; $61,000 in connection with corporate and investor relations consultants; $54,355 in professional fees; $26,912 in listing related fees; and other general and administrative expenses necessary for our operations. These amounts included $72,600 of non-cash items with stock issued in lieu of services.
Previous report
Net cash from financing
Reworded paragraphs (16)
Previous wording
Okmin entered into a Joint Venture Agreement and Operating Agreement in February 2021, committing $100,000 in the initial phase to acquire working interests in ten oil and gas leases located in Okmulgee and Muskogee Counties in Oklahoma. Under the Operating Agreement, Okmin has a 50% Working Interest in 710 acres and a 25% interest in 80 acres. The Company’s Joint Venture partner, Blackrock Energy LLC (“Blackrock”), is the operator of the project. Pursuant to a further agreement entered into on June 10, 2022, the Company added an additional five oil and gas leases across 739 acres to its Joint Venture with Blackrock, thereby expanding the overall project to fifteen leases covering over 1,500 acres. In the six months ended December 31, 2023, lease operating expenses including taxes recorded across the extended Joint Venture totaled $26,884 and our share of the Joint Venture recorded revenues of $32,931 from oil and gas sales, predominantly oil, compared with $22,785 in revenues for the corresponding six months ended December 31, 2022.
Current wording
Okmin entered into a Joint Venture Agreement and Operating Agreement in February 2021, committing $100,000 in the initial phase to acquire working interests in ten oil and gas leases located in Okmulgee and Muskogee Counties in Oklahoma. Under the Operating Agreement, Okmin has a 50% Working Interest in 710 acres and a 25% interest in 80 acres. The Company’s Joint Venture partner, Blackrock Energy LLC (“Blackrock”), is the operator of the project. Pursuant to a further agreement entered into on June 10, 2022, the Company added an additional five oil and gas leases across 739 acres to its Joint Venture with Blackrock, thereby expanding the overall project to fifteen leases covering over 1,500 acres. In the nine months ended March 31, 2024, lease operating expenses including taxes recorded across the extended Joint Venture totaled $39,477 and our share of the Joint Venture recorded revenues of $41,109 from oil and gas sales, predominantly oil, compared with $37,912 in revenues for the corresponding nine months ended March 31, 2023.
Previous wording
The Company through its wholly owned Kansas subsidiary, Okmin Operations, LLC entered into an agreement in July 2021 to acquire a 72.5% Net Revenue Interest in the Vitt Lease located in Neosho County, Kansas. Okmin Operations, LLC acquired the lease with a cash payment of $25,000 together with a commitment to make additional capital and operating expenditures to rework the wells on the lease. The lease covers 160 acres and after initial reworking now includes nine oil wells, two idle wells and four water injection wells. At present, five of the nine oil wells are pumping. In September 2023, the operator began a rework program for five of the producing wells on the lease. As of our last fiscal year end on June 30, 2023, additional expenditures beyond the purchase totaled approximately $101,000. During the six months ended December 31, 2023, the Company’s expenditures at the Vitt Lease totaled $5,700. For the six months ended December 31, 2023, the Company received $1,972 in revenues from the project compared to revenues for the six months ending December 31, 2022 of $2,317.
Current wording
The Company through its wholly owned Kansas subsidiary, Okmin Operations, LLC entered into an agreement in July 2021 to acquire a 72.5% Net Revenue Interest in the Vitt Lease located in Neosho County, Kansas. Okmin Operations, LLC acquired the lease with a cash payment of $25,000 together with a commitment to make additional capital and operating expenditures to rework the wells on the lease. The lease covers 160 acres and after initial reworking now includes nine oil wells, two idle wells and four water injection wells. At present the wells are not pumping, as they require additional maintenance work. As of our last fiscal year end on June 30, 2023, additional expenditures beyond the purchase totaled approximately $101,000. During the nine months ended March 31, 2024, the Company’s expenditures at the Vitt Lease totaled $5,719. For the nine months ended March 31, 2024, the Company received $1,972 in revenues from the project compared to revenues for the nine months ending March 31, 2023 of $5,209.
Previous wording
The Vitt Lease has now become a small nominal producing lease, though not on a consistent basis as we continue to encounter various maintenance issues that have to be addressed. The Company continues to explore a number of possibilities for the Vitt Lease, which may include involving a partner in its further development.
Current wording
The Vitt Lease has now become a small nominal lease able to produce oil, though not on a consistent basis as we continue to encounter various maintenance issues that have to be addressed. The Company continues to explore a number of possibilities for the Vitt Lease, which may include involving a partner in its further development.
Previous wording
During the six months ended December 31, 2023, gas sales continued to be suspended on the property due the failure of equipment owned by the gas pipeline company at its compressor station. In order to replace the failed equipment, the gas pipeline company is requiring additional gas throughput to justify the investment. As a result of this, in the six months ended December 31, 2023 the Company recorded no revenues from the project compared to revenues for the six months ended December 31, 2022 of $1,948.
Current wording
During the nine months ended March 31, 2024, gas sales continued to be suspended on the property due the failure of equipment owned by the gas pipeline company at its compressor station. In order to replace the failed equipment, the gas pipeline company is requiring additional gas throughput to justify the investment. As a result of this, in the nine months ended March 31, 2024 the Company recorded no revenues from the project compared to revenues for the nine months ended March 31, 2023 of $1,948.
Previous wording
In the six months ended December 31, 2023, our partner and operator, Blackrock Energy, LLC agreed to a farmout agreement of its working interests in West Sheppard Pool (with the exception of a 2% overriding royalty interest maintained by Blackrock). Blackrock’s interests were transferred to Sheppard Pool Operating, LLC (hereinafter referred to as “SPO”), the owner of the adjacent East Sheppard Pool leases. SPO also became the Operator of record on the project. This does not change our working interests in the project. The Company and SPO had already previously entered into a gas gathering agreement in June 2023 in an effort to restore and ultimately improve gas flows into the gas transit pipeline system.
Current wording
During the second half of calendar 2023, our partner and operator, Blackrock Energy, LLC agreed to a farmout agreement of its working interests in West Sheppard Pool (with the exception of a 2% overriding royalty interest maintained by Blackrock). Blackrock’s interests were transferred to Sheppard Pool Operating, LLC (hereinafter referred to as “SPO”), the owner of the adjacent East Sheppard Pool leases. SPO also became the Operator of record on the project. This transaction does not change our working interests in the project.
Previous wording
The 26 existing wells on the leases range from 850 feet to 1,950 feet in depth with gas production from several zones as their main objective. Prior to the suspension of activities following a compressor outage, only 6 of the 26 wells on the property were selling into the pipeline. Subsequently an additional 4 wells were connected in late 2022, so in total there are now 10 of the 26 wells at West Sheppard Pool connected, which will be ready to sell gas once there is a resolution to the pipeline issue.
Current wording
Prior to the suspension of activities following a compressor outage, only 6 of the 26 wells on the property were selling into the pipeline. Subsequently an additional 4 wells were connected in late 2022, so in total there are now 10 of the 26 wells at West Sheppard Pool connected to the gas gathering system.
Previous wording
In the six months ended December 31, 2023, the Company’s lease operating expenditures on the project were $11,191 with additional gas fees, transportation and taxes aggregating $4,761. For the six months ended December 31, 2023 the Company recorded $10,562 in revenues from the project compared to revenues for the six months ending December 31, 2022 of $41,188.
Current wording
In the nine months ended March 31, 2024, the Company’s lease operating expenditures on the project were $16,022 with additional gas fees, transportation and taxes aggregating $4,882. For the nine months ended March 31, 2024 the Company recorded $10,849 in revenues from the project compared to revenues for the nine months ending March 31, 2023 of $53,397.
Previous wording
We generated $22,789 in revenue from oil and gas sales for the three months ended December 31, 2023, as compared to $26,006 in revenues generated in the three months ended December 31, 2022. The decrease in revenue is predominantly attributable to lower natural gas prices. These lower prices not only reduced the sales price we received for each MCF sold, but also led to the curtailment of operations on certain of our properties until prices improve which resulted in a decrease of our production volumes. We also received $950 in interest income from our cash balances for three months ended December 31, 2023.
Current wording
We generated $8,465 in revenue from oil and gas sales for the three months ended March 31, 2024, as compared to $30,228 in revenues generated in the three months ended March 31, 2023. The decrease in revenue is predominantly attributable to lower natural gas prices. These lower prices not only reduced the sales price we received for each MCF sold, but also led to the curtailment of operations on certain of our properties until prices improve which resulted in a decrease of our production volumes. We also received $706 in interest income from our cash balances for three months ended March 31, 2024.
Previous wording
The net loss for the three months ended December 31, 2023 was $91,852 compared to a net loss of $163,579 for the three months ended December 31, 2022. The Expenses during the three month period ended December 31, 2023, included $23,402 in lease operating expenses, including taxes and royalties; $60,750 in accrued compensation; $4,191 in interest expense; $17,500 in legal fees; $22,941 in other consulting and professional fees; and other general and administrative expenses necessary for our operations. The Expenses during the comparative three month period ended December 31, 2022 included: $70,265 in lease operating expenses, including taxes and royalties; $40,500 in compensation, $5,066 in interest expense, $60,000 in connection with corporate consultants, $14,627 in professional fees and other general and administrative expenses necessary for our operations. These amounts included $60,000 of non-cash items with stock issued in lieu of services.
Current wording
The net loss for the three months ended March 31, 2024 was $121,127 compared to a net loss of $138,718 for the three months ended March 31, 2023. The expenses during the three month period ended March 31, 2024, included: $25,429 in lease operating expenses (including taxes and royalties), $40,500 in deferred and unpaid compensation, $3,966 in interest expense, $25,288 to outside consultants, $26,350 in legal and professional fees and other general and administrative expenses necessary for our operations. These amounts included $25,288 of non-cash items with stock issued in lieu of services. Expenses during the comparative three month period ended March 31, 2023, including lease operating expenses, were higher and included: $100,019 in lease operating expenses (including taxes and royalties), $40,500 in compensation, $4,658 in interest expense, $12,500 in connection with our manager of land and resource development, $9,206 in professional fees and other general and administrative expenses necessary for our operations.
Previous wording
We generated $45,465 in revenue from oil and gas sales for the six months ended December 31, 2023, as compared to $68,238 in revenues in the six months ended December 31, 2022. The decrease in revenue is predominantly attributable to lower natural gas prices. These lower prices not only reduced the sales price we received for each MCF sold, but also led to a decrease in our production volumes as operations on certain of our properties have been curtailed until prices improve. Current revenue was also negatively affected by the continued suspension of gas sales at West Sheppard Pool due to the failure of equipment owned by the gas pipeline company at its compressor station. During the current period, we also received $4,851 in interest income from our cash balances compared to interest income of $1,250 for the six months ended December 31, 2022.
Current wording
We generated $53,930 in revenue from oil and gas sales for the nine months ended March 31, 2024, as compared to $98,466 in revenues generated in the nine months ended March 31, 2023. The decrease in revenue is attributable to lower natural gas prices. These lower prices not only reduced the sales price we received for each MCF sold, but also led to the curtailment of operations on certain of our properties until prices improve which resulted in a decrease of our production volumes. Additionally, in the previous corresponding nine months ending March 31, 2023 there was significantly more rework operations being conducted on our properties. We also received $5,557 in interest income from our cash balances for nine months ended March 31, 2024.
Previous wording
In the six months ended December 31, 2023, net cash from investing activities was $2,476 versus net cash of $15,152 expended on investing activities in the previous corresponding six months ended December 31, 2022.
Current wording
In the nine months ended March 31, 2024, net cash from investing activities was $Nil versus net cash of $33,017 expended on investing activities in the previous corresponding nine months ended March 31, 2023.
Previous wording
Net cash from financing activities in the six months ended December 31, 2023 totaled $119,456, which was largely attributable to stock issued in lieu of services. Net cash from financing activities in the corresponding six months ended December 31, 2022 totaled $406,975, which was predominantly comprised of private placements of equity securities during the period.
Current wording
Net cash used in financing activities in the nine months ended March 31, 2024 totaled $10,000 which was entirely for repayment of debt. Net cash from financing activities in the corresponding nine months ended March 31, 2023 totaled $363,875, which was predominantly comprised of private placements of equity securities during the period.
Previous wording
As of December 31, 2023, we had total assets of $898,564, comprised primarily of cash and cash equivalents of $112,636, production revenue receivable of $10,299, oil and gas properties $698,813 and other assets of $76,720. As at December 31, 2023, we had total liabilities of $409,249, primarily comprised of convertible debt and related interest payable of $208,499, accounts payable of $5,000, and accrued liabilities of $195,750 which is predominantly deferred compensation expense as the CEO is currently deferring salary in an effort to conserve cash.
Current wording
As of March 31, 2024, we had total assets of $838,637, comprised primarily of cash and cash equivalents of $83,646, production revenue receivable of $6,712, oil and gas properties $697,560 and prepaid expenses of $50,719. As at March 31, 2024, we had total liabilities of $470,449, primarily comprised of convertible debt and related interest payable of $206,699, accounts payable of $27,500 and accrued liabilities of $236,250 which is predominantly deferred compensation expense as the CEO is currently deferring salary in an effort to conserve cash.
Previous wording
Our business plan calls for substantial capital resource requirements and we have incurred significant losses since inception. The Company had a net loss of $203,687 for the six months ended December 31, 2023 and an accumulated deficit of $1,038,991 as of December 31, 2023. The Company had a working capital deficit of $77,719 as at December 31, 2023 and for the remainder of the 2024 fiscal year, the Company anticipates cash needs of approximately $230,000, of which approximately $130,000 is for general corporate overhead and $100,000 for continued work on oil and gas properties. The Company anticipates receiving limited revenue from oil and gas sales and intends to obtain the remaining capital through private sales of securities.
Current wording
Our business plan calls for substantial capital resource requirements and we have incurred significant losses since inception. The Company had a net loss of $324,814 for the nine months ended March 31, 2024 and an accumulated deficit of $1,160,118 as of March 31, 2024. The Company had a working capital deficit of $122,673 as at March 31, 2024 and for the remainder of the 2024 fiscal year, the Company anticipates cash needs of approximately $70,000. The Company anticipates receiving limited revenue from oil and gas sales and intends to obtain the remaining capital through private sales of securities or debt funding.
Previous wording
As reflected in the accompanying condensed financial statements, the Company had a net loss of $183,437 for the six months ended December 31, 2023 and an accumulated deficit of $1,018,742 as of December 31, 2023. These factors, among others, raise doubt about the Company’s ability to continue as a going concern.
Current wording
As reflected in the accompanying condensed financial statements, the Company had a net loss of $324,814 for the nine months ended March 31, 2024 and an accumulated deficit of $1,160,118 as of March 31, 2024. These factors, among others, raise doubt about the Company’s ability to continue as a going concern.
Previous wording
The Company had a working capital deficit of $57,469 as at December 31, 2023 and management believes that the Company will require additional working capital for the remainder of the 2024 fiscal year. For the remainder of the 2024 fiscal year, the Company anticipates cash needs of approximately $230,000, of which approximately $130,000 is for general corporate overhead and $100,000 for continued work on oil and gas properties. The Company anticipates receiving limited revenue from oil and gas sales and intends to obtain the remaining capital through private sales of securities.
Current wording
The Company had a working capital deficit of $122,673 as at March 31, 2024 and management believes that the Company will require additional working capital for the remainder of the 2024 fiscal year. For the remainder of the 2024 fiscal year, the Company anticipates cash needs of approximately $70,000. The Company anticipates receiving limited revenue from oil and gas sales and intends to obtain the remaining capital through debt and/or equity funding.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The 26 existing wells on the leases range from 850 feet to 1,950 feet in depth with gas production from several zones as their main objective.