NOTE 14 COMMITMENTS
lawsuits, claims and other contingencies arise in the ordinary course of the Companys business activities. While the ultimate
outcome of any future contingency is not determinable at this time, management believes that any liability or loss resulting therefrom
will not materially affect the financial position, results of operations or cash flows of the Company.
On July 16, 2012, the Company
received notice that it was named as a defendant along with several other parties and up to 100 unnamed John Does in a civil lawsuit
for damages for wrongful death, negligence, negligent entrustment, permissive use liability, negligent hiring and premises liability
in the death of woman in rural California. The civil suit, case S-1500-CV-276772 SPC, was filed on May 30, 2012 with a summons
issued on June 25, 2012, in Kern County, in the State of California, in the Superior Court of the State of California. While the
outcome of this lawsuit cannot be predicted with certainty, management feels the lawsuit is totally without merit and expects
to be eventually dismissed as a defendant from this lawsuit. Management does not expect this lawsuit to have a material adverse
impact on our financial condition or results of operation.
The Company, as an owner or lessee
and operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge
of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on
the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability
for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The
Company maintains insurance coverage that is customary in the industry, although the Company is not fully insured against all
The Company is not aware of any
environmental claims existing as of November 30, 2012. There can be no assurance, however, that current regulatory requirements
will not change, or past non-compliance with environmental issues will not be discovered on the Companys oil and gas properties.