Income Taxes

12 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

3. INCOME TAXES

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

	2012		2011			2010
Current:
Federal	$	1,452,000	$	1,266,000		$	3,950,000
State		20,000		48,000			174,000
		1,472,000		1,314,000			4,124,000
Deferred:
Federal		1,126,000		1,982,000			708,000
State		676,000		(104,000	)		69,000
		1,802,000		1,878,000			777,000
	$	3,274,000	$	3,192,000		$	4,901,000

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:

	2012			2011			2010
Provision (benefit) for income taxes at statutory rate	$	3,725,749		$	4,090,069		$	5,712,242
Percentage depletion		(846,040	)		(733,516	)		(684,053	)
State income taxes, net of federal provision (benefit)		464,677			(92,989	)		325,000
State net operating loss valuation allowance (release)		(31,000	)		31,000			(278,000	)
Other		(39,386	)		(102,564	)		(174,189	)
	$	3,274,000		$	3,192,000		$	4,901,000

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:

	2012		2011
Deferred tax liabilities:
Financial basis in excess of tax basis, principally intangible drilling costs capitalized for financial purposes and expensed for tax purposes	$	30,320,765	$	26,939,720
Derivative contracts		—		84,001
		30,320,765		27,023,721
Deferred tax assets:
State net operating loss carry forwards, net of valuation allowance of $0 in 2012 and $31,000 in 2011		1,008,271		1,130,732
AMT credit carry forwards		1,189,053		—
Deferred directors’compensation		990,455		986,340
Statutory depletion carry forwards		415,958		—
Other		130,021		121,899
		3,733,758		2,238,971
Net deferred tax liabilities	$	26,587,007	$	24,784,750

At September 30, 2012, the Company had an income tax benefit of $1,008,271 related to Oklahoma state income tax net operating loss (OK NOL) carry forwards expiring from 2025 to 2031. The valuation allowance of $31,000 that was recorded in fiscal 2011 for the Oklahoma NOL’s was reversed in 2012 as management believes that they will be utilized before they expire. The AMT carry forwards do not have an expiration date.