Income Taxes

12 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

INCOME TAXES

3. INCOME TAXES

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

	2011			2010		2009
Current:
Federal	$	1,266,000		$	3,950,000	$	1,246,000
State		48,000			174,000		—
		1,314,000			4,124,000		1,246,000
Deferred:
Federal		1,982,000			708,000		(3,254,000	)
State		(104,000	)		69,000		(560,000	)
		1,878,000			777,000		(3,814,000	)
	$	3,192,000		$	4,901,000	$	(2,568,000	)

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:

	2011			2010			2009
Provision (benefit) for income taxes at statutory rate	$	4,090,069		$	5,712,242		$	(1,690,827	)
Percentage depletion		(733,516	)		(684,053	)		(469,962	)
State income taxes, net of federal provision (benefit)		(92,989	)		325,000			(451,440	)
State net operating loss carryforward benefit		—			—			(154,000	)
State net operating loss valuation allowance (release)		31,000			(278,000	)		278,000
Other		(102,564	)		(174,189	)		(79,771	)
	$	3,192,000		$	4,901,000		$	(2,568,000	)

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:

	2011		2010
Deferred tax liabilities:
Financial basis in excess of tax basis, principally intangible drilling costs capitalized for financial purposes and expensed for tax purposes	$	26,939,720	$	24,141,021
Derivative contracts		84,001		630,307
		27,023,721		24,771,328
Deferred tax assets:
State net operating loss carry forwards, net of valuation allowance of $31,000 in 2011 and $0 in 2010		1,130,732		825,048
Deferred directors compensation		986,340		813,836
Other		121,899		225,694
		2,238,971		1,864,578
Net deferred tax liabilities	$	24,784,750	$	22,906,750

At September 30, 2011, the Company had an income tax benefit of $1,161,732 related to Oklahoma state income tax net operating loss (OK NOL) carryforwards expiring from 2016 to 2031. A valuation allowance of $31,000 was recorded in the current year for the Oklahoma NOL’s that management does not believe the Company will be able to realize before they expire.