Asset Retirement Obligations

3 Months Ended

Dec. 31, 2014

Asset Retirement Obligations [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, 2014, the Company estimates the undiscounted cash flows related to asset retirement obligation to total approximately $661,520 (September 30, 2014 - $ 689,445). The fair value of the liability at December 31, 2014 is estimated to be $454,223 (September 30, 2014 - $ 469,013) 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, 2014			September 30, 2014
Balance, beginning of period	$	469,013		$	446,155
Liabilities incurred		–			73,395
Effect of foreign exchange		(19,098	)		(64,079	)
Disposal		–			(4,045	)
Accretion expense		4,308			17,587
Balance, end of period	$	454,223		$	469,013