Income Taxes

6 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

For the six months ended June 30, 2013, the Company incurred a net income tax expense of $833,000 compared to a net income tax benefit of $64,000 for the six months ended June 30, 2012. These represent effective income tax rates of approximately 24% and (20)% for the six months ended June 30, 2013 and, 2012, respectively. The effective tax rate for the first half of 2013 is calculated based on the first quarter net income for 2013 adjusted for estimated permanent tax differences such as depletion allowances. During 2013, depletion allowances have decreased due to lower oil and gas revenues compared to 2012. As of June 30, 2013, our balance sheet reflects an income tax payable of $101,000.

The Company classifies interest and penalties incurred on tax payments as income tax expenses. During the first six months ended June 30, 2013, the Company made income tax payments of $100,000 for the 2013 tax year.