Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax [Abstract]

INCOME TAXES:

NOTE 10 — INCOME TAXES:

An analysis of our deferred taxes follows:

	As of December 31,
	2011			2010
Tax effect of temporary differences:
Oil and gas properties – full cost	($	381,413	)	($	224,624	)
Asset retirement obligations		153,281			134,611
Stock compensation		4,962			4,932
Hedges		(12,882	)		8,205
Alternative minimum tax credit carryforward		5,358			—
Other		8,931			4,923
	($	221,763	)	($	71,953	)

We estimate that we have an approximate $20,386 current federal income tax benefit for the year ended December 31, 2011. We have a $19,946 current income tax receivable at December 31, 2011.

A reconciliation between the statutory federal income tax rate and our effective income tax rate as a percentage of income before income taxes follows:

	Year Ended December 31,
	2011			2010			2009
Income tax expense computed at the statutory federal income tax rate		35.0	%		35.0	%		(35.0	%)
Domestic production activities deduction		—			(0.6	)		—
State taxes and other		1.1			2.6			0.2
Statutory depletion		(0.1	)		(0.1	)		—
Effective income tax rate		36.0	%		36.9	%		(34.8	%)

In 2010 and 2009, we recognized a tax deduction for domestic production activities pursuant to Internal Revenue Code Section 199.

Income taxes allocated to accumulated other comprehensive income related to oil and gas hedges amounted to $20,290, $292 and ($54,003) for the years ended December 31, 2011, 2010 and 2009, respectively.

As of December 31, 2011 and 2010, we had unrecognized tax benefits of $385 and $425, respectively. If recognized, all of our unrecognized tax benefits as of December 31, 2011 would impact our effective tax rate. A reconciliation of the total amounts of unrecognized tax benefits follows:

Total unrecognized tax benefits as of December 31, 2010	$	425
Increases (decreases) in unrecognized tax benefits as a result of:
Tax positions taken during a prior period		—
Tax positions taken during the current period		—
Settlements with taxing authorities		(40	)
Lapse of applicable statute of limitations		—
Total unrecognized tax benefits as of December 31, 2011	$	385

Our unrecognized tax benefits pertain to proposed state income tax audit adjustments. We believe that our unrecognized tax benefits may be reduced to zero within the next 12 months upon completion and ultimate settlement of the state examinations.

It is our policy to classify interest and penalties associated with underpayment of income taxes as interest expense and general and administrative expenses, respectively. We have recognized $25, ($1,157) and $3,171 of interest expense related to uncertain tax positions for the years ended December 31, 2011, 2010 and 2009, respectively. We have not recognized any penalties in connection with our uncertain tax positions. The liabilities for unrecognized tax benefits and accrued interest payable are components of other current liabilities on our balance sheet.

The tax years 2008 through 2010 remain subject to examination by major tax jurisdictions.