Investments:

12 Months Ended

Dec. 31, 2011

2. Investments:

Investment in affiliate:

Following is a summary of KNG's unaudited financial position at December 31, 2009, which is the most recently available information, and results of development stage activity for the year ended December 31, 2009:

Current assets	$	17,933
Oil and gas property,
unproved		98,742
Other non-current assets		33,667
	$	150,342

Current liabilities	$	96,567
Long-term debt and other
noncurrent liabilities		163,200
		259,767

Stockholders' equity (deficit)		(109,425	)
	$	150,342

Revenues	$	-

Net loss (development stage)	$	(46,195	)

Cumulative net loss	$	(115,541	)

As of December 31, 2011, after a careful evaluation of the anticipated costs and benefits of future exploration works, the Company has decided not to pursue this project and intends to dispose of its investment in KNG. The Company will instead concentrate on projects that are in a more advanced stage of exploration. Management believes that the disposal of KNG will have no material impact on the consolidated financial statements.

There is no market for the common stock of KNG and accordingly, no quoted market price is available.

Investment in Joint Venture:

As of December 31, 2011, the Joint Venture generated an unaudited cumulative loss of over $22 million as a result of exploration activities in the Kurgan region during 2003-2009. Since cumulative losses of Joint Venture exceed the Company's investment, the investment is carried at zero value. The Company has no liability to guarantee the debts of the Joint Venture.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

+ References+ Details

Siberian Energy Group Inc. 10-K