Asset Retirement Obligations

3 Months Ended

Dec. 31, 2012

Asset Retirement Obligation [Abstract]

Asset Retirement Obligations

10. 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 December 31, 2012, the Company estimates the undiscounted cash flows related to asset retirement obligation to total approximately $655,709 (September 30, 2012 - $664,403). The fair value of the liability at December 31, 2012 is estimated to be $424,058 (September 30, 2012 - $425,700) 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:

	December 31, 2012			September 30, 2012
Balance, beginning of period	$	425,700		$	387,368
Liabilities incurred		–			–
Effect of foreign exchange		(5,593	)		22,038
Disposal		–			–
Accretion expense		3,951			16,294
Balance, end of period	$	424,058		$	425,700