Asset Retirement Obligations

9 Months Ended

Jun. 30, 2011

Asset Retirement Obligations

9.  Asset Retirement Obligations

The total future asset retirement obligation is estimated by management based on the Company’s net working interests in all wells and facilities, estimated costs to reclaim and abandon wells and facilities and the estimated timing of the costs to be incurred in future periods. At June 30, 2011, the Company estimates the undiscounted cash flows related to asset retirement obligation to total approximately $694,019 (September 30, 2010 - $531,055). The fair value of the liability at June 30, 2011 is estimated to be $424,781 (September 30, 2010 - $386,934) using a risk free rate of 3.74% and an inflation rate of 2%. The actual costs to settle the obligation are expected to occur in approximately 35 years.

Changes to the asset retirement obligation were as follows:

	June 30, 2011		September 30, 2010
Balance, beginning of year	$	386,934	$	358,235
Liabilities incurred		–		–
Effect of foreign exchange		26,257		14,749
Accretion expense		11,590		13,950
Balance, end of year	$	424,781	$	386,934