3. INCOME TAXES

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

	2016			2015		2014
Current:
Federal	$	2,166,000		$	2,053,000	$	4,996,000
State		83,000			111,000		214,000
		2,249,000			2,164,000		5,210,000
Deferred:
Federal		(8,597,000	)		2,033,000		5,702,000
State		(1,363,000	)		639,000		908,000
		(9,960,000	)		2,672,000		6,610,000
	$	(7,711,000	)	$	4,836,000	$	11,820,000

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:

	2016			2015			2014

Provision (benefit) for income taxes at statutory rate	$	(6,299,259	)	$	4,955,069		$	12,887,512
Percentage depletion		(395,649	)		(530,783	)		(1,466,456	)
State income taxes, net of federal provision (benefit)		(683,800	)		487,500			1,018,550
Other		(332,292	)		(75,786	)		(619,606	)
	$	(7,711,000	)	$	4,836,000		$	11,820,000

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:

	2016		2015
Deferred tax liabilities:
Financial basis in excess of tax basis, principally intangible drilling costs capitalized for financial purposes and expensed for tax purposes	$	33,656,415	$	41,880,691
Derivative contracts		-		1,637,987
		33,656,415		43,518,678
Deferred tax assets:
State net operating loss carry forwards		259,981		323,536
AMT credit carry forwards		-		164,478
Deferred directors' compensation		1,273,279		1,149,217
Restricted stock expense		494,776		457,934
Derivative contracts		166,597		-
Other		785,775		787,506
		2,980,408		2,882,671
Net deferred tax liabilities	$	30,676,007	$	40,636,007

At September 30, 2016, the Company had an income tax benefit of $259,981 related to Oklahoma state income tax net operating loss (OK NOL) carry forwards expiring from 2029 to 2031. There is no valuation allowance for the OK NOL’s as management believes they will be utilized before they expire.