ARETE INDUSTRIES INC

CIK:0000820901|SEC Filings

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues:
Oil sales	$ 243,848	$ 219,404	$ 683,827	$ 633,961
Natural gas sales	21,385	20,220	55,828	65,638
Royalty revenues	0	483	1,959	1,760
Total revenues	265,233	240,107	741,614	701,359
Oil and gas producing activities:
Lease operating expenses	215,167	313,086	660,197	800,541
Production taxes	18,595	19,367	47,604	55,434
Depreciation, depletion, amortization and accretion	62,000	104,523	198,000	403,333
Impairment	0	0	0	252,000
General and administrative expenses:
Director fees	10,000	10,000	30,000	30,000
Investor relations	1,108	1,097	4,962	8,410
Legal, auditing and professional fees	2,473	23,185	66,219	109,069
Consulting fees executive services-Related Parties	8,812	14,000	40,030	54,732
Other administrative expenses	8,132	10,103	24,428	33,275
Total operating expenses	326,287	495,361	1,071,440	1,746,794
Operating loss	(61,054)	(255,254)	(329,826)	(1,045,435)
Other income (expense):
Gain on sale of oil & gas properties	23,844	0	23,844	0
Other income	0	0	2,218	0
Interest income (expense), net	(25,296)	(25,067)	(77,831)	(70,019)
Total other income (expense)	(1,452)	(25,067)	(51,769)	(70,019)
Loss before income taxes	(62,506)	(280,321)	(381,595)	(1,115,454)
Income tax benefit (expense)	0	0	0	0
Net loss	(62,506)	(280,321)	(381,595)	(1,115,454)
Net Loss Applicable to Common Stockholders:
Net loss	(62,506)	(280,321)	(381,595)	(1,115,454)
Preferred stock dividends declared	(47,990)	(47,991)	(142,930)	(143,970)
Net loss applicable to common stockholders	$ (110,496)	$ (328,312)	$ (524,525)	$ (1,259,424)
Loss Per Share Applicable to Common Stockholders:
Basic	$ (0.01)	$ (0.02)	$ (0.04)	$ (0.09)
Diluted	$ (0.01)	$ (0.02)	$ (0.04)	$ (0.09)
Weighted Average Number of Common Shares Outstanding:
Basic	14,674,580	14,673,700	14,674,580	14,450,550
Diluted	14,674,580	14,673,700	14,674,580	14,450,550

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash Flows from Operating Activities:
Net loss	$ (381,595)	$ (1,115,454)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, depletion and amortization	123,000	328,000
Accretion of discount on asset retirement obligations	75,000	75,333
Amortization of loan servicing fees	1,875	938
Settlement of Asset Retirement Obligation		(4,530)
Gain on sale of oil and gas properties	(23,844)	0
Impairment expense	0	252,000
Common stock issued in exchange for services	0	25,334
Changes in operating assets and liabilities:
Accounts receivable	7,280	(16,042)
Prepaid expenses and other	(8,174)	20,722
Accounts payable	35,885	(2,078)
Accounts payable - DNR Oil & Gas	(80,522)	0
Accounts payable - related parties and director's fees	67,782	0
Other accrued expenses and accrued interest	8,900	1,551
Net cash (used in) operating activities	(174,413)	(434,226)
Cash Flows from Investing Activities:
Capital expenditures for property and equipment	(150)	(373)
Proceeds from sale of oil and gas properties	150,000	0
Net cash provided by (used in) investing activities	149,850	(373)
Cash Flows from Financing Activities:
Proceeds from notes payable	32,526	250,500
Principal payments on notes payable	(31,900)	(127,369)
Principal payments on notes payable - related parties	(10,489)	(9,879)
Proceeds received from subscription receivable	0	105,000
Proceeds received from issuance of Series A Two preferred stock	0	50,000
Preferred stock dividends paid	(68,998)	(95,979)
Net cash (used in) Provided by financing activities	(78,861)	172,273
Net increase (decrease) in cash and equivalents	(103,424)	(262,326)
Cash and equivalents, beginning of period	171,370	521,666
Cash and equivalents, end of period	67,946	259,340
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	64,499	60,080
Cash paid for interest - related parties	1,362	1,972
Cash paid for finance expenses	1,195	0
Accrued dividends	121,922	47,990
Common stock issued for loan closing costs	$ 0	$ 7,500

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Current Assets:
Cash	$ 67,946	$ 171,370
Accounts receivable - oil and gas sales	6,734	14,014
Prepaid expenses and other	11,206	3,032
Total Current Assets	85,886	188,416
Oil and gas properties, at cost, successful efforts method:
Proved properties	5,199,370	5,325,381
Unproved properties	154,982	154,977
Furniture and equipment	22,522	22,522
Total property and equipment	5,376,874	5,502,880
Less accumulated depreciation, depletion and amortization	(3,807,522)	(3,684,522)
Net Property and Equipment	1,569,352	1,818,358
TOTAL ASSETS	1,655,238	2,006,774
Accounts payable:
Trade accounts payable	169,228	133,343
Accounts payable - DNR Oil & Gas, Inc.	372,917	453,439
Accounts payable - directors and affiliates	145,398	77,616
Dividends payable:
Dividends payable	41,992	5,998
Dividends payable - directors and affiliates	79,930	41,992
Accrued interest expense:
Accrued interest expense	7,353	5,254
Accrued interest expense - directors and affiliates	25,368	18,567
Notes and advances payable - current portion:
Notes and advances payable	1,270,528	240,750
Notes and advances payable - directors and affiliates	135,598	134,839
Current portion of asset retirement obligations	445,900	425,200
Other accrued costs and expenses	61,745	61,745
Total Current Liabilities	2,755,957	1,598,743
Notes and advances payable, net of current portion:
Notes and advances payable, net of discount	5,651	1,032,928
Notes and advances payable - Directors and affiliates	5,187	16,435
Asset retirement obligations, net of current portion	714,100	659,800
Total Long-Term Liabilities	724,938	1,709,163
Total Liabilities	3,480,895	3,307,906
Stockholders' Equity (Deficit):
Convertible Class A preferred stock; $10,000 face value per share, authorized 1,000,000 shares: Series 1; 30,000 shares authorized, none issued and outstanding. Series 2; authorized 2,500 shares, 272 shares issued and outstanding at September 30, 2017 and December 31, 2016, liquidation preference $2,841,922.	2,720,000	2,720,000
Common stock, no par value; 499,000,000 shares authorized, 14,674,580 issued and outstanding at September 30, 2017 and December 31, 2016.	21,535,469	21,535,469
Accumulated deficit	(26,081,126)	(25,556,601)
Total Stockholders' Equity (Deficit)	(1,825,657)	(1,301,132)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	1,655,238	2,006,774
Series A1 Preferred Stock [Member]
Stockholders' Equity (Deficit):
Convertible Class A preferred stock; $10,000 face value per share, authorized 1,000,000 shares: Series 1; 30,000 shares authorized, none issued and outstanding. Series 2; authorized 2,500 shares, 272 shares issued and outstanding at September 30, 2017 and December 31, 2016, liquidation preference $2,841,922.	0	0
Series A2 Preferred Stock [Member]
Stockholders' Equity (Deficit):
Convertible Class A preferred stock; $10,000 face value per share, authorized 1,000,000 shares: Series 1; 30,000 shares authorized, none issued and outstanding. Series 2; authorized 2,500 shares, 272 shares issued and outstanding at September 30, 2017 and December 31, 2016, liquidation preference $2,841,922.	$ 2,720,000	$ 2,720,000