RISK FACTORS

A n investment in our securities involves a high degree o f r i sk.  Y ou should c a refully consider the risks descr i bed below together w i th all of t he other i nformat i on i ncluded i n t h i s prospectus before making a n investment dec i sio n.  If any of the follow i ng r i sks ac t ually occurs , our b usi n ess, f ina n c i al co n d i t i on or results of operat i o n could mater i ally suffer.  In t ha t case, you may lose all or part o f your i nvestmen t.  If we a re unable t o preve n t eve n ts that have a neg ati ve af f ec t f rom o ccurr in g , t he n ou r bus in ess may suffer .

Risks Relating to Our Company

Since we are a new business with essentially no operating history, investors have no basis to evaluat e our ability to operate profitability .  We w ere incorp o rated in September 2012   and ha v e received no re v enue fr o m o per a ti o n s to date .  Our a cti v itie s t o date h av e been limited to or g anizational effort s , assembling a management team, r a i s in g capital , re s earchin g a nd de v elopin g o ur bu s ine ss pl a n , completing the acquisition of our first property and commencing our first drilling program.  We face all o f the r i s k s c o mm o nl y enc o untered b y o ther ne w bu s ine ss e s , in c ludin g the l a ck o f a n e s t a bli s hed o per a tin g hi s t o r y , need for a dditi o nal capital a nd per so nnel , and c o mpetiti o n.  There i s n o a ss urance that o ur bu s ine ss w ill be s ucce ss ful or that we can ever operate profitably.  We may not be able to effectively manage the demands required of a new business in our industry, such that we may be unable to successfully implement our business plan or achieve profitability.

Since we have no reserves at this time, investors in our common stock cannot be assured that we will have any cash flow in the future.   The Buck Peak prospect is the primary oil and gas prospect where we have invested all of our capital resources.  This prospect is still in the exploration stage, and no estimate can be made at this time as to oil and natural gas reserves, proved, probable or otherwise, nor can any guarantees be made that sufficient reserves will be discovered for production.  The absence of any recent drilling or production history prevents us from assigning any proved reserves to the property.  Even with new technology such as 3D seismic and other exploration techniques, oil and gas exploration is a high risk undertaking.  As a result, investors have no assurance that we will have any cash flow.

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Our investment in a single prospect and the concurrent lack of diversification will increase the risk to investors that we will not be profitable . Our investment in the Buck Peak prospect and the capital required to pay our share of drilling costs increases the risk that the operation of our business will not be profitable, as we will not be able to spread the risk of investment and operation over a number of different assets until we become profitable or receive additional investment.  If one or both of the wells at the Buck Peak prospect is not successful in producing economically viable amounts of oil and/or gas, our business may suffer and you may lose all or part of your investment.

If the Buck Peak prospect is not productive of oil or natural gas, any funds spent on exploration may be lost and we will be forced to seek additional opportunities, which will be expensive and time-consuming .  All of our current capital investment is tied up in the Buck Peak prospect.  Since the Buck Peak prospect is not currently developed, we are dependent on the development efforts to prove reserves at the Buck Peak prospect for additional cash flow.  If we are unable to prove that the Buck Peak prospect can be productive of oil and natural gas, we will be forced to seek additional investments.  Investigating and locating suitable property for acquisition is expensive and time consuming.  Even if we are successful in identifying one or more additional properties for acquisition, there is no assurance that we can obtain such property at reasonable prices or that sufficient working capital will be available to finance the acquisition.

A major oil company, Southwestern Energy Co., has recently acquired all the leasehold and certain producing assets of both Quicksilver Resources, Inc. and SWEPI (Royale Dutch Shell affiliate) in the Niobrara play in the Sand Wash Basin covering Moffat and Routt Counties and such acquisition may increase competition for leases, drilling rigs and other services in the area. Previously, SWEPI had announced plans to monetize their assets in this area as well as other selected assets across the US.  The agreement between SWEPI and Southwestern represents the culmination of SWEPI’s efforts as it relates to its Sand Wash Basin assets.  Drilling results in the Niobrara play in the Sand Wash Basin to date have been mixed, with some good wells and also some mechanically-plagued and uneconomic wells.  Southwestern’s entry into to this play may increase competition for rigs and oil field services as well as create competition for lease acquisitions, thus potentially driving prices upward.  There is no guarantee that Southwestern will develop the proper drilling and development strategies to economically develop the Niobrara on a wider scale.

Our ability to sell any production and/or receive market prices for our production may be adversely affected by lack of transportation, capacity constraints and interruptions .  The marketability of any production from the Buck Peak prospect or any other interests that we may acquire depends in part upon the availability, proximity and capacity of third-party refineries, natural gas gathering systems and processing facilities.  We expect to deliver any crude oil and natural gas produced from our properties through trucking services and pipelines that we do not own.  The lack of availability or capacity of these systems and facilities could reduce the price offered for any production or result in the shut-in of producing wells or the delay or discontinuance of development plans for properties.

We are an “emerging growth company” and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors .  As an “emerging growth company,” as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to the following:

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reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and

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exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and from holding a vote for stockholder approval of any golden parachute payments not previously approved.

We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock if such a market develops, and our stock price may be more volatile.

We are not required to obtain an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002 until we are no longer an emerging growth company .  For so long as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to obtain the auditor attestation of our assessment of our internal controls. Once we are no longer an emerging growth company or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal controls over financial reporting. We will remain an “emerging growth company” until the earliest to occur of (1) the last day of the fiscal year during which our total annual revenues equal or exceed $1 billion (subject to adjustment for inflation), (2) the last day of the fiscal year during which occurs the fifth anniversary of our initial public offering, (3) the date on which we have, during the  previous three-year period, issued more than $1 billion in non-convertible debt, or (4) the date on which we are deemed a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Once we are no longer an emerging growth company, compliance with Section 404(b) will be costly.

Our financial statements may not be comparable to other public companies . We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b) of the JOBS Act.  This election allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  As a result of this election, if the PCAOB adopts new or revised accounting standards and we decide to delay adoption of such changes, our financial statements may not be comparable to companies that comply with public company effective dates and the price of our common stock may be adversely affected.

While we believe we have adequate internal controls over financial reporting, we will be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock . Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we will likely be required to furnish a report by our management on internal controls for the fiscal year ending December 31, 2015.  Such a report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting, including a statement as to whether or not our internal controls are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by our management.  While we believe our internal controls over financial reporting are effective, we are still constructing the system, processing documentation and performing the evaluations needed to comply with Section 404, which is both costly and challenging.  We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. If we are unable to assert that our internal controls over financial reporting are effective, or if we disclose significant deficiencies or material weaknesses in our internal controls, investors could lose confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.

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We may not be required to register our common stock under the Exchange Act, which would reduce the disclosure we are required to provide to our investors compared to other public companies and may adversely affect the price of our stock in any market that may develop.   Our securities are not presently registered under the Exchange Act, and we may not be required or may not choose to register under that Act in the future.  Registration under the Exchange Act would be required if we meet certain minimum asset and shareholder requirements or if any of our securities were to be listed on a national securities exchange.  Since we do not believe that we will meet the minimum requirements for mandatory registration, and we do not expect that our common stock will be listed on an exchange in the foreseeable future, we may not be subject to certain reporting requirements imposed by that Act.  Among other consequences, we will not be required to comply with the proxy solicitation rules of the Exchange Act and our directors and officers will not be required to file reports of their trading activity in our stock under Section 16 of the Exchange Act. As a result, there will be less information available to the public regarding our corporate affairs and insider transactions in our common stock than other companies that have registered common stock under the Exchange Act.  

Our business is substantially dependent on our senior executive officers and the loss of service of any of these individuals would adversely affect our business .   Stephen J. Foley is our Chief Executive Officer and responsible for overseeing our business, developing our business plan and the strategic vision of our company.  Frederick Witsell is our President and responsible for identifying and managing our properties.  Each of these individuals is critical to the perceived success of our business.  The loss of service of either of these individuals would adversely affect our business, as we have very limited personnel and expect to rely on contractors for a majority of service that we require.  There is no assurance we would be able to replace either of such individuals, or if so, on terms that were acceptable to our company.  We have no key man life insurance on either of these individuals.

Because we do not have an audit or compensation committee, shareholders will have to rely on our Board of Directors, which includes only one “independent” director as defined by a national securities exchange, to perform these functions .  We do not presently maintain an audit or compensation committee. These functions are performed by our Board of Directors as a whole and only one of the members of our Board meets the definition of “independent” under the rules of any national securities exchange.  Since two of our current Board members are also part of our management team, there is a potential conflict where these individuals participate in discussions concerning management compensation and audit issues that may affect management decisions.  This lack of independence may adversely affect our corporate governance and the operation of our business.

Colorado law and our Articles of Incorporation may protect our directors from certain types of lawsuits at the expense of the shareholders .  The la ws of the St a te of C olorado pro v ide that director s of a corporation s hall n o t be liable to the c o rp o ration or it s s hareh o lder s for monetar y dama g e s for all but limited t y pe s of conduct.  Our Arti c le s of Incorpor a tion permit u s to indemnify our director s and officer s a g ain s t all dama g e s incurred in connecti o n with our bu s ine ss to the fulle s t extent pro v ided or allowed b y l aw .  The exculpation pr ov i s ion s ma y h av e the effect of pre v entin g s hareholder s from reco v erin g dam ag e s ag ain s t our direct o r s cau s ed b y their ne g li g ence , poor jud g ment or other circum s tance s .

Risks Relating to the Energy Production and/or Distribution Industry .

Oil and gas operations are affected by fluctuations in oil and natural gas prices and low prices could have a material adverse effect on the future of our operations .   If exploration efforts are successful in identifying economic amounts of oil and gas, our future success will depend largely on the prices received for any oil or gas production.  Prices received also will affect the amount of future cash flow available for capital expenditures and may affect the ability to raise additional capital.  Lower prices may also affect the amount of natural gas and oil that can be economically produced from reserves either discovered or acquired.

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Prices for natural gas and oil fluctuate widely.  For example, natural gas and oil prices declined significantly in 2008, and, for an extended period of time, remained below prices obtained in previous years.  Factors that can cause price fluctuations include:

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The level of consumer product demand;

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Weather conditions;

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Domestic and foreign governmental regulations;

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The price and availability of alternative fuels;

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Political and ethnic conflicts in natural gas and oil producing regions;

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The domestic and foreign supply of natural gas and oil;

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The price of foreign imports; and

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Overall economic conditions.

The cost of oil and natural gas exploration is extremely volatile and may adversely affect our operations.   The costs of oil and gas exploration, such as the costs of drilling rigs, casing, cement, and pumps, and the fuel and parts necessary to keep the rigs and pumps operating and the costs of the oil field service crews have been volatile over the past few years in direct proportion to the amount of ongoing oil and gas exploration.  As with most other companies involved in resource exploration and development, we may be adversely affected by future increases in the costs of conducting exploration, development and resource extraction that may not be fully offset by increases in the price received on sales of oil or natural gas.

Our operations are subject to health, safety and environmental laws and regulations which may expose us to significant costs and liabilities and which may not be covered by insurance.   Our oil and natural gas exploration will be subject to stringent and complex federal, state and local laws and regulations governing health and safety aspects of our operations, the discharge of materials into the environment and the protection of the environment.  These laws and regulations may impose on our operations numerous requirements, including the obligation to obtain a permit before conducting drilling or underground injection activities; restrictions on the types, quantities and concentration of materials that may be released into the environment; limitations or prohibitions of drilling activities on certain lands lying within wilderness, wetlands and other protected areas; specific health and safety criteria to protect workers; and the responsibility for cleaning up any pollution resulting from operations.  Numerous governmental authorities such as the U.S. Environmental Protection Agency, or the EPA, and analogous state agencies have the power to enforce compliance with these laws and regulations and the permits issued under them, oftentimes requiring difficult and costly actions.  Failure to comply with these laws and regulations may result in the assessment of administrative, civil or criminal penalties; the imposition of investigatory or remedial obligations; the issuance of injunctions limiting or preventing some or all of our proposed operations; and delays in granting permits and cancellation of leases.

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There is an inherent risk of incurring significant environmental costs and liabilities in the performance of our operations, some of which may be material, due to our handling of petroleum hydrocarbons and wastes, our emissions to air and water, the underground injection or other disposal of our wastes, the use of hydraulic fracturing fluids and historical industry operations and waste disposal practices.  Under certain environmental laws and regulations, we may be liable regardless of whether we were at fault for the full cost of removing or remediating contamination, even when multiple parties contributed to the release and the contaminants were released in compliance with all applicable laws.  In addition, accidental spills or releases on our properties may expose us to significant liabilities that could have a material adverse effect on our financial condition or results of operations and which may not be covered by insurance.  Aside from government agencies, the owners of properties where our wells are located, the operators of facilities where our petroleum hydrocarbons or wastes are expected to be taken for reclamation or disposal and other private parties may be able to sue us to enforce compliance with environmental laws and regulations, collect penalties for violations or obtain damages for any related personal injury or property damage.  Some sites are located near current or former third-party oil and natural gas operations or facilities, and there is a risk that contamination has migrated from those sites to ours.  Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly material handling, emission, waste management or cleanup requirements could require us to make significant expenditures to attain and maintain compliance or may otherwise have a material adverse effect on our own results of operations, competitive position or financial condition.  We may not be able to recover some or any of these costs from insurance.

Federal, state, and local legislative and regulatory initiatives relating to hydraulic fracturing, as well as government reviews of such activities, could result in increased costs, additional operating restrictions or delays, and adversely affect our production and/or ability to book future reserves.   Hydraulic fracturing involves the injection of water, sand, and chemical additives under pressure into a targeted subsurface formation.  The water and pressure create fractures in the rock formations, which are held open by the grains of sand, enabling the oil or natural gas to flow to the wellbore.  The process is typically regulated by state oil and natural gas commissions; however, the EPA asserted federal regulatory authority over certain hydraulic-fracturing activities involving diesel fuel under the Safe Drinking Water Act.  In addition, the COGCC has adopted (and other states have adopted or are considering adopting) regulations that impose more stringent permitting, disclosure and well construction requirements on hydraulic fracturing operations.  Further, on February 23, 2014, Colorado’s Air Quality Control Commission fully adopted EPA’s Standards of Performance for Crude Oil and Natural Gas Production, Transmission, and Distribution; adopted corresponding revisions to its emissions reporting and permitting framework; and adopted complimentary oil and gas control measures.  These regulations will affect our operations, increase our costs of exploration and production and limit the quantity of natural gas and oil that we can economically produce to the extent that we use hydraulic fracturing.

Competition in the oil and natural gas industry is intense, and many of our competitors have resources that are substantially greater than ours.   We operate in the highly competitive environment to acquire producing prospects and productive properties, marketing oil and gas and securing equipment and trained personnel.  As a small oil and gas company, most competitors, including major and large independent oil and gas companies, possess and employ financial, technical and personnel resources substantially greater than ours.  Those companies may be able to develop and acquire more prospects and productive properties than our financial or personnel resources permit.  Our ability to acquire additional prospects and discover reserves in the future will depend on our ability to evaluate and select suitable properties and consummate transactions in a highly competitive environment.  Also, there is substantial competition for capital available for investment in the oil and gas industry.  Larger competitors may be better able to withstand sustained periods of unsuccessful drilling and absorb the burden of changes in laws and regulations more easily than we can, which would adversely affect our competitive position.  We may not be able to compete successfully in the future in acquiring prospective properties, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital.

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Seasonal weather conditions, lease stipulations, and permit restrictions adversely affect our ability to conduct drilling activities where we expect to operate .  Oil and natural gas operations in the Rocky Mountains are sometimes adversely affected by seasonal weather conditions and lease stipulations designed to protect various wildlife and surface interests.  These restrictions may limit our ability to operate in those areas and can potentially intensify competition for drilling rigs, oil field equipment, services, supplies and qualified personnel, which may lead to periodic shortages.  These constraints and the resulting shortages or high costs could delay our operations and materially increase our operating and capital costs.  For example, we currently operate in an area that is (a) considered an Elk Winter Concentration Area, which means we must cease operations, except for certain emergency operations, from December 1 through April 15 of each year; and (b) accessed by a county road that is considered a “No Winter Maintenance” section, which means that the county will not maintain or plow the road from approximately November 1 through June 1 or later depending upon conditions of each year.

We may incur losses as a result of title deficiencies.   We own working and revenue interests in oil and natural gas leasehold interests.  The existence of a material title deficiency can render a lease worthless and can adversely affect our results of operations and financial condition.  Title insurance covering mineral leaseholds is not generally available and, in all instances, we forego the expense of retaining lawyers to examine the title to the mineral interest to be placed under lease or already placed under lease until the drilling block is assembled and ready to be drilled.  As is customary in our industry, we rely upon the judgment of oil and natural gas lease brokers, in-house landmen or independent landmen who perform the field work in examining records in the appropriate governmental offices and abstract facilities before attempting to acquire or place under lease a specific mineral interest.  We do not always perform curative work to correct deficiencies in the marketability of the title to us.  In cases involving serious title problems, the amount paid for affected oil and natural gas leases can be lost, and the target area can become undrillable.  We may be subject to litigation from time to time as a result of title issues.

The oil and gas business involves many operating risks that can cause substantial losses .  The oil and natural gas business involves a variety of operating risks, including:

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Fires;

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Explosions;

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Blow-outs and surface cratering;

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Uncontrollable flows of underground natural gas, oil or formation water;

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Natural disasters;

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Pipe and cement failures;

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Casing collapses;

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Embedded oilfield drilling and service tools;

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Abnormal pressure formations; and

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Environmental hazards such as natural gas leaks, oil spills, pipeline ruptures or discharges of toxic gases.

If any of these events occur, we could incur substantial losses as a result of:

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Injury or loss of life;

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Severe damage to and destruction of property, natural resources or equipment;

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Pollution and other environmental damage;

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Clean-up responsibilities;

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Regulatory investigation and penalties;

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Suspension of our operations; or

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Repairs necessary to resume operations.

If we were to experience any of these problems, it could affect well bores, gathering systems and processing facilities, any one of which could adversely affect our ability to conduct operations.  We may be affected by any of these events more than larger companies, since we have limited working capital.  We currently have general liability insurance with a combined single limit per occurrence of not less than $1,000,000 for bodily injury and property damage and a combined occurrence limit of $2,000,000 and control of well insurance with limits of $5,000,000 for any one occurrence.  For other risks, however, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented.  In addition, pollution and environmental risks generally are not fully insurable.  If a significant accident or other event occurs and is not fully covered by insurance, it could adversely affect operations and/or our financial condition.  Moreover, we cannot assure shareholders that we will be able to maintain adequate insurance in the future at rates considered reasonable.

Extensive state and federal regulation may be costly to comply with and result in significant fines and penalties.   Companies that explore for and develop, produce and sell oil and natural gas in the United States are subject to extensive federal, state, local and tribal laws and regulations, including complex tax and environmental laws and the corresponding regulations, and are required to obtain various permits and approvals from federal, state, local and tribal agencies and authorities.  Our ability to obtain, sustain and renew the necessary permits and approvals from federal, state, local and tribal agencies and authorities on acceptable terms and without unfavorable restrictions or conditions is subject to a change in regulations and policies and to the discretion of the applicable governmental agencies or authorities, among other factors.  Possible regulation related to global warming and climate change could have an adverse effect on our operations and demand for oil and gas.

Risks Related to the Offering and Our Common Stock

The initial price of our common stock in this offering has been arbitrarily determined and bears no necessary relationship to our lack of earnings, the book value of our common stock or any other traditional criteria of value.  The initial offering price has been determined by negotiations between representatives of our management and certain selling shareholders and is based in part on the recent sales price of our common stock.  However, since no underwriter has been involved in the offering of our common stock in the past and no underwriter is involved in this offering, the price has not been negotiated at arm’s length as might otherwise be the case.  Purchasers of our common stock in this offering have no assurance that they will be able to sell the common stock for a profit, or at all.

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Our offering is being conducted on a “best efforts” basis, and there is no assurance that we will obtain the funding we need to explore our property, pay our administrative expenses or further our business plan .  No person or entity has agreed to purchase any or all of our common stock in this offering.  We will use our best efforts to find purchasers for the stock offered by us during the offering period.  There is no provision for creating an escrow or trust account or other similar arrangement for the proceeds of this offering.  All funds from the offering received by us will be immediately deposited into our bank account and available for all valid corporate purposes.  If we do not find qualified investors to purchase all of the stock offered under this prospectus, we may be forced to seek capital from other sources or curtail our business plan.  Investors in this offering have no assurance that the funding that we accept will be adequate for the purposes for which we have budgeted it.

Since no broker or dealer has committed to create or maintain a market in our stock, there is no assurance that our stock will be quoted in the OTC Bulletin Board or OTC Markets, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so .  It is our intention to seek one or more broker-dealers to apply for quotation of our common stock on the OTC Bulletin Board or OTC Markets following the date of this prospectus.  However, we have no agreement with any broker-dealer at this time, and there is no assurance that we will be successful in finding one in the future. In addition, we believe that our stock will be characterized as a “micro-cap” security and therefore subject to increased scrutiny by FINRA.  A micro-cap security is generally a low priced security issued by a small company, or the stock of a company with low capitalization. If we are unable to obtain quotation of our common stock on the OTC Bulletin Board or OTC Markets, trading in our stock will be limited, and purchasers of our common stock may have difficulty selling their shares, should they desire to do so.

Our stock price may be volatile and as a result you could lose all or part of your investment . In addition to volatility associated with over-the-counter securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:

	●	failure to successfully implement our business plan;
	●	failure to meet our revenue or profit goals or operating budget;
	●	decline in demand for our common stock;
	●	sales of additional amounts of common stock;
	●	downward revisions in securities analysts’ estimates or changes in general market conditions;
	●	investor perception of our industry or our prospects; and
	●	general economic trends.

In addition, stock markets have experienced extreme price and volume fluctuations and the market prices of securities have been highly volatile. These fluctuations are often unrelated to operating performance and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

 

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A small number of existing shareholders own a significant amount of our common stock, which could limit your ability to influence the outcome of any shareholder vote . Our executive officers and directors beneficially own approximately 45% of our common stock as of the date of this prospectus. Under our Articles of Incorporation and Colorado law, the vote of a majority of the shares outstanding is generally required to approve most shareholder action.  As a result, these individuals shall strongly influence the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our Articles of Incorporation or proposed mergers or other significant corporate transactions. We have no existing agreements or plans for mergers or other corporate transactions that would require a shareholder vote at this time. However, shareholders should be aware that they may have limited ability to influence the outcome of any vote in the future.

The sale of a substantial number of shares of our common stock may cause the price of our common stock to decline .  It is likely that market sales of large amounts of common stock (or the potential for those sales even if they do not actually occur) could cause the market price of our common stock to decline, if a trading market is ever established, which may make it difficult to sell our common stock in the future at a time and price which we deem reasonable or appropriate and may also cause you to lose all or a part of your investment. ( See “ SHARES ELIGIBLE FOR FUTURE SALE ”).

Since our common stock is not presently listed on a national securities exchange, trading in our shares will likely be subject to rules governing “penny stocks,” which will impair trading activity in our shares .  Our common stock may be subject to rules adopted by the SEC regulating broker-dealer practices in connection with transactions in penny stocks.  Those disclosure rules applicable to penny stocks require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized disclosure document required by the SEC.  These rules also require a cooling off period before the transaction can be finalized.  These requirements may have the effect of reducing the level of trading activity in any secondary market for our common stock.  Many brokers may be unwilling to engage in transactions in our common stock because of the added disclosure requirements, thereby making it more difficult for stockholders to dispose of their shares. ( See “ MARKET INFORMATION ”).

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock .  In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

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Issuance of our stock in the future could dilute existing shareholders and adversely affect the market price of our common stock, if a public trading market develops.   We have the authority to issue up to 110,000,000 shares of stock, including 100,000,000 shares of common stock and 10,000,000 shares of preferred stock, and to issue options and warrants to purchase shares of our stock without shareholder approval.  Because our common stock is not currently listed on an exchange, we are not required to solicit shareholder approval prior to issuing large blocks of our stock.  These future issuances could be at values substantially below the price paid for our common stock by investors in this offering.  In addition, we could issue large blocks of our stock to fend off unwanted tender offers or hostile takeovers without further shareholder approval.  Because there is presently no trading market for our common stock, the issuance of our stock may have a disproportionately large impact on its price compared to larger companies.

The issuance of preferred stock in the future could adversely affect the rights of the holders of our common stock.  An issuance of preferred stock could result in a class of outstanding securities that would have preferences with respect to voting rights and dividends and in liquidation over the common stock and could, upon conversion or otherwise, have all of the rights of our common stock.  Our Board of Directors’ authority to issue preferred stock could discourage potential takeover attempts or could delay or prevent a change in control through merger, tender offer, proxy contest or otherwise by making these attempts more difficult or costly to achieve.

We have never paid dividends on our common stock and we do not anticipate paying any in the foreseeable future . We have not paid dividends on our common stock to date, and we may not be in a position to pay dividends for the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop our business plan and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our operations. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of our Board of Directors. ( See “ DIVIDEND POLICY ”).

Forward-Looking Statements

A few of the uncertainties that could affect the accuracy of forward-looking statements, besides the specific Risk Factors identified above, include:

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Changes in the general economy affecting the disposable income of the public;

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Changes in environmental law, including federal, state and local legislation;

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Changes in drilling requirements imposed by state or local laws or regulations;

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Terrorist activities within and outside the United States;

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Technological changes in the oil and gas industry;

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Acts and omissions of third parties over which we have no control;

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Inflation and the costs of goods or services used in our operation;

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Access and availability of materials, equipment, supplies, labor and supervision, power and water;

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Interpretation of drill hole results and the uncertainty of reserve estimates;

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The availability of sufficient pipeline and other transportation facilities to carry our production and the impact of these facilities on price;

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The level of demand for the production of oil and gas; and

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Changes in our business strategy.

The Private Securities Litigation Reform Act of 1995, which provides a “safe harbor” for similar statements by existing public companies, does not apply to our offering, as we are not previously registered as a public company.