3. INCOME TAXES

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

	2017			2016			2015
Current:
Federal	$	314,000		$	2,166,000		$	2,053,000
State		-			83,000			111,000
		314,000			2,249,000			2,164,000
Deferred:
Federal		390,000			(8,597,000	)		2,033,000
State		(15,000	)		(1,363,000	)		639,000
		375,000			(9,960,000	)		2,672,000
	$	689,000		$	(7,711,000	)	$	4,836,000

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:

	2017			2016			2015

Provision (benefit) for income taxes at statutory rate	$	1,477,327		$	(6,299,259	)	$	4,955,069
Percentage depletion		(570,801	)		(395,649	)		(530,783	)
State income taxes, net of federal provision (benefit)		3,900			(683,800	)		487,500
Effect of graduated rates		85,644			(86,745	)		(62,922	)
Restricted stock tax benefit		(238,000	)		-			-
Deferred directors compensation benefit		(79,000	)		-			-
Other		9,930			(245,547	)		(12,864	)
	$	689,000		$	(7,711,000	)	$	4,836,000

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:

	2017		2016
Deferred tax liabilities:
Financial basis in excess of tax basis, principally intangible drilling costs capitalized for financial purposes and expensed for tax purposes	$	38,185,387	$	33,656,415
Derivative contracts		200,786		-
		38,386,173		33,656,415
Deferred tax assets:
State net operating loss carry forwards		655,741		259,981
AMT credit carry forwards		3,499,320		-
Deferred directors' compensation		1,295,333		1,273,279
Restricted stock expense		411,019		494,776
Derivative contracts		-		166,597
Statutory depletion carry forwards		634,405		-
Other		839,348		785,775
		7,335,166		2,980,408
Net deferred tax liabilities	$	31,051,007	$	30,676,007

At September 30, 2017, the Company had a deferred tax asset of $595,526 related to Oklahoma state income tax net operating loss (OK NOL) carry forwards expiring from 2029 to 2037. There is no valuation allowance for the OK NOL’s, as management believes they will be utilized before they expire. The AMT carry forwards do not have an expiration date.