NOTE F – LONG TERM WATER ASSETS

Long term assets consist of water and water contracts held for future use or sale. 8,700 acre feet of water are currently held in a water bank on Company land in southern Kern County. The water is held at cost which includes the price paid for the water and the cost to pump and deliver the water from the California aqueduct into the water bank. Banked water costs also include costs related to the right to receive an additional 2,362 acre feet of water in the future from Antelope Valley East Kern Water Agency, or AVEK and we have approximately 11,046 acre feet of water in AVEK’s water bank. An additional 14,786 acre-feet of transferable water purchased for $8,988,000 is owned by the Company. The Company holds State Water Project, or SWP, contracts for 3,444 acre feet of water with the Tulare Water Storage District and the Dudley-Ridge Water Storage District to supply water through 2035. These contracts are being amortized using the straight line method over that period. Annual amortization for the next five years will be $708,000 per year. Water contracts with the WRMWSD and the Tejon-Castac Water District are also in place, but were entered into with each District at inception of the contract and not purchased later from third parties, and do not have a related financial value on the books of the Company. Therefore there is no amortization expense related to these contracts. Water assets consist of the following at September 30, 2012 and December 31, 2011:



($ in thousands)	September 30, 2012			December 31, 2011
Banked water and water for future delivery	$	4,448		$	3,546
Transferable water	8,988			8,988
SWP Contracts (net of accumulated amortization of $1,852 and $1,317 at September 30, 2012 and December 2011, respectively)	15,986			16,510
Total long-term assets	29,422			29,044
less: Current portion	(708		)	(708		)
	$	28,714		$	28,336