NOTE 1   ORGANIZATION AND BUSINESS OPERATIONS Nature of Operations The Company is an independent natural gas and oil company engaged in the exploration, development, exploitation, and acquisition of natural gas and oil reserves in North America. The Company s primary area of focus is the State of New Mexico, particularly southeastern New Mexico. Reverse Acquisition Effective December 27, 2010, the Company completed a 1-for-55 reverse split of its common stock in accordance with Article 78.207 of the Nevada Revised Statutes (the  Reverse Split ). The Reverse Split resulted in a decrease in the Company s authorized share capital from 2,000,000,000 shares of common stock, par value $0.001 per share, to 36,363,637 shares of common stock, par value, $0.001 per share, with a corresponding decrease in the number of issued and outstanding shares of the Company s common stock from 135,933,086 shares to 2,471,544 shares (after accounting for fractional share interests being rounded up to the next whole number). Completion of the Reverse Split was a condition precedent for the merger with Pure Gas Partners II, L.P. ( Pure ). Effective January 3, 2011, the Company completed the acquisition of Pure Energy Group, Inc. ( Pure Sub ) as contemplated pursuant to the Agreement and Plan of Merger dated December 2, 2010 (the  Pure Merger Agreement ) among the Company, Doral Acquisition Corp., the Company s wholly owned subsidiary ( Doral Sub ), Pure and Pure Sub, a wholly owned subsidiary of Pure (Pure Sub and Pure being collectively referred to herein as the  Pure Energy Group  or the "Predecessor"). Pursuant to the provisions of the Pure Merger Agreement, all of Pure s oil and gas assets and liabilities were transferred to Pure Sub. Pure Sub was then merged with and into Doral Sub, with Doral Sub continuing as the surviving corporation (the  Pure Merger ). Upon completion of the Pure Merger, the outstanding shares of Pure Sub were converted into an aggregate of 9,981,536 shares of the Company s common stock. As a result of the Pure