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Income Taxes
6 Months Ended
Mar. 31, 2015
Income Taxes [Abstract]  
Income Taxes

NOTE 2: Income Taxes

 

The Company’s provision for income taxes differs from the statutory rate primarily due to estimated federal and state benefits generated from estimated excess federal and Oklahoma percentage depletion, which are permanent tax benefits.

 

Both excess federal percentage depletion, which is limited to certain production volumes and by certain income levels, and excess Oklahoma percentage depletion, which has no limitation on production volume, reduce estimated taxable income or add to estimated taxable loss projected for any year. The federal and Oklahoma excess percentage depletion estimates will be updated throughout the year until finalized with detailed well-by-well calculations at fiscal year-end. Federal and Oklahoma excess percentage depletion, when a provision for income taxes is recorded, decreases the effective tax rate, while the effect is to increase the effective tax rate when a benefit for income taxes is recorded. The benefits of federal and Oklahoma excess percentage depletion are not directly related to the amount of pre-tax income recorded in a period. Accordingly, in periods where a recorded pre-tax income or loss is relatively small, the proportional effect of these items on the effective tax rate may be significant. The effective tax rate for the six months ended March 31, 2015, was 29% as compared to 32% for the six months ended March 31, 2014. The effective tax rate for the second quarter ended March 31, 2015, was -12% as compared to 33% for the quarter ended March 31, 2014.  The lower estimated effective tax rate as of the end of the 2015 second quarter of 29%, as compared to 31% estimated at the end of the 2015 first quarter, resulted in a tax benefit recorded during the 2015 second quarter. When a tax benefit is recorded in a quarter with net income (as opposed to a net loss) before provision for income taxes, the result is a negative effective tax rate for the quarter, as was the case for the 2015 second quarter.