3. INCOME TAXES

The Company’s provision (benefit) for income taxes is detailed as follows:



	2013		2012		2011
Current:
Federal	$	1,813,000	$	1,452,000	$	1,266,000
State		150,000		20,000		48,000
		1,963,000		1,472,000		1,314,000
Deferred:
Federal		4,003,000		1,126,000		1,982,000
State		764,000		676,000		(104,000)
		4,767,000		1,802,000		1,878,000
	$	6,730,000	$	3,274,000	$	3,192,000

The difference between the provision (benefit) for income taxes and the amount which would result from the application of the federal statutory rate to income before provision (benefit) for income taxes is analyzed below for the years ended September 30:



	2013		2012		2011

Provision (benefit) for income taxes at statutory rate	$	7,241,517	$	3,725,749	$	4,090,069
Percentage depletion		(1,059,303)		(846,040)		(733,516)
State income taxes, net of federal provision (benefit)		572,650		464,677		(92,989)
State net operating loss valuation allowance (release)		-		(31,000)		31,000
Other		(24,864)		(39,386)		(102,564)
	$	6,730,000	$	3,274,000	$	3,192,000

Deferred tax assets and liabilities, resulting from differences between the financial statement carrying amounts and the tax basis of assets and liabilities, consist of the following at September 30:



	2013		2012
Deferred tax liabilities:
Financial basis in excess of tax basis, principally
intangible drilling costs capitalized for financial
purposes and expensed for tax purposes	$	33,557,515	$	30,320,765
Derivative contracts		165,402		-
		33,722,917		30,320,765
Deferred tax assets:
State net operating loss carry forwards, net of
valuation allowance of $0 in 2013 and 2012		782,785		1,008,271
AMT credit carry forwards		-		1,189,053
Deferred directors' compensation		1,021,717		990,455
Restricted stock expense		426,788		-
Statutory depletion carry forwards		-		415,958
Other		137,620		130,021
		2,368,910		3,733,758
Net deferred tax liabilities	$	31,354,007	$	26,587,007

At September 30, 2013, the Company had an income tax benefit of $782,785 related to Oklahoma state income tax net operating loss (OK NOL) carry forwards expiring from 2028 to 2031. There is no valuation allowance for the OK NOL’s as management believes they will be utilized before they expire.