OKMIN RESOURCES INC
For the period ended Dec 31, 2024. Filed Feb 20, 2025.
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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.
Dec 31, 2024 · Filed Feb 20, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001079973-24-001518
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-12-31; filed 2025-02-20.
0001079973-25-000298
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 61 previous paragraphs and 69 current paragraphs.
39 unchanged; 15 reworded; 14 added; 6 removed; 1 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 (14)
Current report
Unless otherwise indicated, references to the “Company,” “us” or “we” refer to Okmin Resources, Inc. and its subsidiaries.
Current report
As of November 2024, the Company assigned its 50% interest in the West Sheppard Pool project to Sheppard Pool Operating, LLC, the operator of the project. After Sheppard Pool Operating has received $22,850 in revenue from the project, the Company will receive a 10% overriding royalty interest (“ORRI”) in the project. Sheppard Pool may elect to reduce the 10% ORRI to 5% by a one-time payment of $100,000 to the Company within 4 years of the effective date of the agreement.
Current report
During the six months ended December 31, 2024, gas sales continued to be suspended on the property and the Company recorded no expenditures or revenues from the project.
Current report
General and administrative expenses increased to $192,879 for the three months ended December 31, 2024 compared to $86,760 for the three months ended December 31, 2023. The primary reason for the increase is due to a non-recurring and non-cash expense of $119,000 in connection with stock issued to consultants and a director of the Company for services in lieu of cash payments.
Current report
For the Six months ended December 31, 2024, as compared to the Six months ended December 31, 2023
Current report
Revenue
Current report
We generated $11,303 in revenue from oil and gas sales for the six months ended December 31, 2024, as compared to $45,465 in revenues in the six months ended December 31, 2023. The decrease in revenue is attributable to lower natural gas prices and reduced operations pending additional funding to conduct additional reworks required to increase production activities. 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 received $895 in interest income from our cash balances compared to interest income of $4,851 for the six months ended December 31, 2023.
Current report
General and Administrative Expense
Current report
General and administrative expenses increased to $252,258 for the six months ended December 31, 2024 as compared to $187,409 for the six months ended December 31, 2023. This increase is largely attributable to the Company recording a non-recurring and non-cash expense of $119,000 in connection with stock issued to in lieu of cash payments to consultants and a director of the Company for services, and higher audit fees due to the requirement to audit the prior two fiscal years as a result of our change of auditors.
Current report
Net Loss
Current report
The net loss for the six months ended December 31, 2024 was $286,543 compared to a net loss of $203,687 for the six months ended December 31, 2023. The Expenses during the six month period ended December 31, 2024, included $20,779 in lease operating expenses, including taxes and royalties; $81,000 in accrued compensation; $8,491 in interest expense and financing costs; $24,182 in audit fees, accounting, and bookkeeping fees of $11,146; $8,400 in listing related fees; and stock issued in lieu of non-cash amounts of $119,000 in connection with personnel and corporate consultants. An impairment charge of $15,761 was recorded in the current period as a test of the current fair value of the oil and gas properties was conducted and it was determined an impairment of the capitalized values was necessary. We also incurred other general and administrative expenses necessary for our operations.
Current report
In the six months ended December 31, 2024, net cash from investing activities was none versus net cash of $2,476 expended on investing activities in the previous corresponding six months ended December 31, 2023.
Current report
Net cash from financing
Current report
Net cash used in financing activities in the six months ended December 31, 2024 totaled $12,000 compared to $4,000 used in the six months ended December 31, 2023, with the entire amount in both periods related to amounts due under the Company’s note payable.
Removed paragraphs (6)
Previous report
In August 2021, the Company entered into an option agreement with Blackrock to acquire a 50% joint venture interest in the West Sheppard Pool Field, a series of leases totaling 1,930 acres located in Okmulgee County, Oklahoma. In November 2021, the Company exercised its option and entered into a definitive joint venture and operating agreement with Blackrock at a cost of $150,000 in cash.
Previous report
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 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. During the year ended June 30, 2024 and the three months ended September 30, 2024, we received no revenue from the property as gas sales continued to be suspended due to further required pipeline work and 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. 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 a lack of throughput to the compressor station.
Previous report
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. Many of those wells would likely benefit from workovers to increase their production potential, and six wells were identified by the operator for reentry to perforate and fracture new zones for both oil and gas. The property also has the potential for infill drilling for new wells within the property. Any work is dependent upon obtaining additional capital, which could include adding an additional partner to fund this work program.
Previous report
General and administrative expenses decreased to $59,379 for the three months ended September 30, 2024 compared to $104,928 for the three months ended September 30, 2024. This decrease is attributable to a decrease in legal and professional fees and the Company’s curtailment of some operations. Expenses related to compensation, interest, rent, accounting and professional fees and other general and administrative expenses necessary for our operations.
Previous report
Net cash (used) from financing
Reworded paragraphs (15)
Previous wording
As a development stage company, Okmin has been focused on the acquisition and development of domestic oil and gas fields, investing in lower profile rework and recompletion opportunities with lower entry costs. The Company's initial projects are located in Oklahoma and Kansas.
Current wording
Okmin has been focused on the acquisition and development of domestic oil and gas fields, investing in lower profile rework and recompletion opportunities with lower entry costs. The Company's initial projects are located in Oklahoma and Kansas.
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 three months ended September 30, 2024, lease operating expenses including taxes recorded across the extended Joint Venture totaled $5,334 and our share of the Joint Venture recorded revenues of $4,808 from oil and gas sales, predominantly oil, compared with $14,556 in revenues for the corresponding three months ended September 30, 2023.
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 six months ended December 31, 2024, lease operating expenses including taxes recorded across the extended Joint Venture totaled $10,187 and our share of the Joint Venture recorded revenues of $9,710 from oil and gas sales, predominantly oil, compared with $32,931 in revenues for the corresponding six months ended December 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 the wells are not pumping, as they require additional maintenance work. As of the fiscal year ending on June 30, 2024, aggregate additional expenditures beyond the purchase totaled approximately $108,000. During the three months ended September 30, 2024, the Company did not conduct any work on the Vitt lease, so expenditures totaled $250. For the three months ended September 30, 2024, the Company received no revenue from the project compared to revenues for the three months ending September 30, 2023 of $1,972.
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 December 31, 2024, aggregate additional expenditures beyond the purchase totaled approximately $108,550. During the six months ended December 31, 2024, the Company conducted minimal work on the Vitt lease, so expenditures totaled $550. For the six months ended December 31, 2024, the Company received $355 in revenue from the project compared to revenues for the six months ending December 31, 2023 of $1,972.
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.
Current wording
The Company previously had a 50% joint venture interest in the West Sheppard Pool Field, a series of leases totaling 1,930 acres located in Okmulgee County, Oklahoma. 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.
Previous wording
The Company has a 50% ownership interest in the Joint Venture with Blackrock. The leases owned by the Joint Venture are subject to landowner royalties and other commitments resulting in net revenue interests to the joint venture of between 71% - 76%, with the exception of the Stephenson well, which has a net revenue interest of approximately 68%.
Current wording
The Company entered into an agreement to become a 50% Joint Venture partner with Blackrock. The leases owned by the Joint Venture are subject to landowner royalties and other commitments resulting in net revenue interests to the joint venture of between 71% - 76%, with the exception of the Stephenson well, which has a net revenue interest of approximately 68%.
Previous wording
The existing seven wells show additional behind-pipe zones and the joint venture partners assessed recompleting a new zone in one of the wells called the KDC. The operator had a rig out on site at KDC in late January 2023 and commenced some work on the well and were planning to conduct a recompletion, though weather conditions made it too dangerous to proceed. Plans were also underway for the operator to commence repairing or possibly replacing the plunger lift systems of some of the wells, with the goal of dewatering the wells to enable the gas to flow freely. The joint venture partners have temporarily deferred pursuing this active rework activity during the current downturn in natural gas pricing or until additional capital is available.
Current wording
The existing seven wells show additional behind-pipe zones and the joint venture partners assessed recompleting a new zone in one of the wells called the KDC. The operator had a rig out on site at KDC in late January 2023 and commenced some work on the well and were planning to conduct a recompletion, though weather conditions made it too dangerous to proceed. Plans were also underway for the operator to commence repairing or possibly replacing the plunger lift systems of some of the wells, with the goal of dewatering the wells to enable the gas to flow freely. The joint venture partners have temporarily deferred pursuing this active rework activity following the downturn in natural gas pricing or until additional capital is available.
Previous wording
In the three months ended September 30, 2024, the Company’s lease operating expenditures on the project were $3,538 with additional gas fees, transportation and taxes aggregating $717. For the three months ended September 30, 2024 the Company recorded $1,242 in revenues from the project compared to revenues for the three months ended September 30, 2023 of $6,149.
Current wording
In the six months ended December 31, 2024, the Company’s lease operating expenditures on the project were $9,428 with additional gas fees, transportation and taxes aggregating $464. For the six months ended December 31, 2024 the Company recorded $1,238 in revenues from the project compared to revenues for the six months ending December 31, 2023 of $10,562. The revenue amount for the current six-month period was negatively affected by a reduction in production and differences between revenue accruals made during the first quarter which were later adjusted downward in the second quarter due to the final sales receipts.
Previous wording
We generated $5,991 in revenue from oil and gas sales for the three months ended September 30, 2024, as compared to $22,677 in revenues generated in the three months ended September 30, 2024. 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 $507 in interest income from our cash balances for three months ended September 30, 2024.
Current wording
We generated $5,312 in revenue from oil and gas sales for the three months ended December 31, 2024, as compared to $22,789 in revenues generated in the three months ended December 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 $388 in interest income from our cash balances for three months ended December 31, 2024.
Previous wording
The net loss for the three months ended September 30, 2024 was $67,785 compared to a net loss of $111,835 for the three months ended September 30, 2023. The expenses during the three month period ended September 30, 2024, included: $9,717 in lease operating expenses (including taxes and royalties), $40,500 in deferred and unpaid compensation, $4,320 in interest expense and financing costs, $8,400 in compliance listing related fees, $9,599 in accounting and professional fees and other general and administrative expenses necessary for our operations. Expenses during the comparative three month period ended September 30, 2023, including lease operating expenses, were higher and included: $33,485 in lease operating expenses (including taxes and royalties), $40,500 in compensation, a non-cash amount of $25,300 in connection with the services of outside consultants with stock issued in lieu of services, $4,278 in interest expense, legal and professional fees and other general and administrative expenses necessary for our operations.
Current wording
The net loss for the three months ended December 31, 2024 was $218,757 compared to a net loss of $91,852 for the three months ended December 31, 2023. The Expenses during the three month period ended December 31, 2024, included $9,518 in lease operating expenses, including taxes and royalties; $40,500 in accrued compensation; $3,678 in interest expense; $10,000 (non-cash) in compliance consulting fees; Audit fees of $24,182 which was higher than in prior periods as the Company was required to audit the previous two fiscal years following its change of independent registered public accountants; $100,000 in stock compensation to Samuel Naparstek who had joined the Board of Directors in July 2024; $9,000 in stock compensation in lieu of cash for an ongoing services agreement with Sierra Land Resources, LLC, plus other professional fees; and other general and administrative expenses necessary for our operations. An impairment charge of $15,761 was recorded in the current period as a test of the current fair value of the oil and gas properties was conducted and it was determined an impairment of the capitalized values was necessary. The Expenses during the comparative 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.
Previous wording
Net cash used in financing activities in the three months ended September 30, 2024 totaled $6,000 which was entirely for repayment of debt. Net cash from financing activities in the corresponding period ended September 30, 2023 totaled $108,325, which was predominantly comprised of stock issued in lieu of services during the period
Current wording
Net cash used in investing activities
Previous wording
As of September 30, 2024, we had total assets of $366,615, comprised primarily of cash and cash equivalents of $73,602, oil and gas properties $292,877 and prepaid expenses of $136. As at March 31, 2024, we had total liabilities of $600,938, primarily comprised of convertible debt and related interest payable of $202,506, accounts payable of $36,480 and accrued liabilities of $317,250 which is predominantly deferred compensation expense as the CEO is currently deferring salary in an effort to conserve cash.
Current wording
As of December 31, 2024, we had total assets of $333,563, comprised primarily of cash and cash equivalents of $57,767 and oil and gas properties at $275,758. As at December 31, 2024, we had total liabilities of $667,644, primarily comprised of convertible debt and related interest payable of $200,184, accounts payable of $32,561, and accrued liabilities-related party of $357,750 in deferred compensation expense as the CEO continues to defer 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 $67,785 for the three months ended September 30, 2024 and an accumulated deficit of $1,776,303 as of September 30, 2024. The Company had a working capital deficit of $527,336 as at September 30, 2024. For the 2025 fiscal year we anticipate cash needs of approximately $300,000 for general corporate overhead and for operations on our existing lease properties. This amount does not include funding for any potential workovers, re-entries, stimulation treatments and recompletions of existing non or low producing wells. Any new work on our properties will require additional capital. A portion of the required cash will be obtained from oil and gas sales. The Company plans to obtain the remainder of the required capital through private sales of securities or debt financing.
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 $286,543 for the six months ended December 31, 2024 and an accumulated deficit of $1,995,061 as of December 31, 2024. The Company had a working capital deficit of $609,877 as at December 31, 2024 and for the remainder of the 2025 fiscal year which started in July 2024, we anticipate cash needs of approximately $150,000 for general corporate overhead and for operations on our existing lease properties. This amount does not include funding for any potential workovers, re-entries, stimulation treatments and recompletions of existing non or low producing wells. Any new work on our properties will require additional capital. The Company anticipates receiving limited revenue from oil and gas sales and intends to obtain the remaining capital through private sales of securities and/or debt financing.
Previous wording
To date, we have funded our operations primarily through the issuance of equity and/or convertible securities for cash. We depend upon debt and/or equity financing and revenues to fund our ongoing operations and to execute our current business plan. In the current 2024 fiscal year, such capital requirements will be in excess of what we have in available cash for planned ongoing activities.
Current wording
To date, we have funded our operations primarily through the issuance of equity and/or convertible securities for cash and via debt financing. We depend upon debt and/or equity financing and revenues to fund our ongoing operations and to execute our current business plan. In the current 2025 fiscal year, such capital requirements will be in excess of what we have in available cash for planned ongoing activities.
Previous wording
As reflected in the accompanying condensed financial statements, the Company had a net loss of $67,785 for the three months ended September 30, 2024 and an accumulated deficit of $1,776,303 as of September 30, 2024. 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 consolidated financial statements, the Company had a net loss of $286,543 for the six months ended December 31, 2024 and an accumulated deficit of $1,995,061 as of December 31, 2024. These factors, among others, raise doubt about the Company’s ability to continue as a going concern.
Previous wording
The Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtaining additional financing. If such additional financing is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue as a going concern. The condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Current wording
The Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtaining additional financing. If such additional financing is not available on terms acceptable to us or at all, then we may need to curtail our operations and/or take additional measures to conserve and manage our liquidity and capital resources, any of which would have a material adverse effect on our financial position, results of operations, and our ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The Company had a working capital deficit of $609,877 as at December 31, 2024 and management believes that the Company will require additional working capital for the remainder of the 2025 fiscal year. To date, we have funded our operations primarily through the issuance of equity and/or convertible securities for cash and via debt financing. We depend upon debt and/or equity financing and revenues to fund our ongoing operations and to execute our current business plan. In the remainder of the 2025 fiscal year, such capital requirements will be in excess of what we have in available cash for planned ongoing activities.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
The Company had a working capital deficit of $527,336 as at September 30, 2024 and for the 2025 fiscal year we anticipate cash needs of approximately $300,000 for general corporate overhead and for operations on our existing lease properties. This amount does not include funding for any potential workovers, re-entries, stimulation treatments and recompletions of existing non or low producing wells. Any new work on our properties will require additional capital. A portion of the required cash will be obtained from oil and gas sales. The Company plans to obtain the remainder of the required capital through private sales of securities or debt financing.