Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED

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CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (USD $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash Flows From Operating Activities    
Net loss, $ (1,855,673) $ (1,171,651)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation, depletion and amortization. 740,270 175,835
Accretion expense. 23,277 9,524
Share-based compensation. 1,701,721 445,234
Gain on derivative put options. 0 (93,408)
Changes in assets and liabilities:    
Accounts receivable. (45,956) 268
Prepaid expenses. (32,795) (77,706)
Accounts payable. 839,621 302,906
Accrued compensation. 0 (100,000)
Net Cash Provided by (Used in) Operating Activities 1,370,465 (508,998)
Payments to purchase oil and natural gas properties (1,751,342) (28,006)
Payments to develop oil and natural gas properties (5,524,201) (474,085)
Purchase of office equipment (54,441) (179,078)
Net Cash Used in Investing Activities (7,329,984) (681,169)
Cash Flows From Financing Activities    
Proceeds from borrowings from Ring Energy, Inc. 0 1,150,000
Proceeds from issuance of common stock 18,987,272 0
Proceeds from issuance of common stock to Ring Energy, Inc. Shareholders 0 10,887,561
Principal payments on revolving line of credit 0 (4,244,428)
Net Cash Provided by Financing Activities 18,987,272 7,793,133
Net Increase in Cash 13,027,753 6,602,966
Cash at Beginning of Period 5,404,167 11,372
Cash at End of Period 18,431,920 6,614,338
Supplemental Cash Flow Information    
Cash paid for interest 0 93,471
Noncash Investing and Financing Activities    
Revision of asset retirement obligation estimate 211,691 0
Asset retirement obligation incurred during development 67,352 0
Issuance of common stock to Ring Energy, Inc. shareholders 0 13,095,369
Accounts payable assumed. 0 9,893
Less: Elimination of note payable to Ring Energy, Inc. 0 (2,003,122)
Less: Prepaid expenses acquired 0 (26,942)
Less: Property and equipment acquired 0 (187,637)
Proceeds from issuance of common stock to Ring Energy, Inc. Shareholders $ 0 $ 10,887,561