ASSET RETIREMENT OBLIGATION

9 Months Ended

Jan. 31, 2012

ASSET RETIREMENT OBLIGATION [Abstract]

ASSET RETIREMENT OBLIGATION

8. ASSET RETIREMENT OBLIGATION

The Company's obligations with respect to asset retirement relate to reclamation of an airstrip, camp site, access roads and reservoir test wells. The obligation is recognized when incurred at the present value of the estimated future reclamation cost using a credit-adjusted risk-free rate of 7 to 13 percent (April 30, 2011 – 7 to 13 percent) and an inflation rate of 2.5 percent (April 30, 2011 – 2.5 percent). During the year ended April 30, 2010, the Company conducted a review of its development plans and well licenses and determined that a number of core holes were not abandoned to accommodate our thermal development plans or in accordance with regulatory requirements. We also evaluated the core holes located outside the potential commercial development area and included a portion of these costs in the re-abandonment liability based on performing the obligation over a 5 year period.

During the year ended April 30, 2011, the Company revised the estimated amounts and timing of the settlement of the asset retirement on the airstrip, campsite, access roads and reservoir test wells and conducted a core hole by core hole analysis to determine the number of core holes that management believes will require re-abandonment. The number of core holes to be re-abandoned increased as a result of this review.  Accordingly, $8.3 million of cost revisions were recorded in the re-abandonment liability during the year ended April 30, 2011. Subsequent cost revisions amounting to $0.5 million in relation to the re-abandonment liability were recorded during the nine months ended January 31, 2012. The Company has submitted a re-abandonment program to the Saskatchewan Ministry of Energy and Resources (“SMER”) that included cost estimates and a schedule of work. The Company is currently working with the SMER to assess the waiver applications of 99 core holes, the majority of which are located outside the current potential development area and are therefore located in areas that are not economically recoverable. The uncertainty related to the timing and/or method of settlement that may be beyond the Company's control is factored into the measurement of the liability. At January 31, 2012, the re-abandonment obligation is comprised of 128 core holes located in areas in or adjacent to the commercial development area plus a portion of the core holes for which waivers were sought and correspond to an undiscounted/gross costs of $25.5 million.

At January 31, 2012, the total undiscounted inflation-adjusted future obligation was approximately $42.6 million (April 30, 2011 $44.3 million).

Continuity of Asset Retirement Obligation (in thousands):	Nine Months ended January 31, 2012			Year ended April 30, 2011
Present value of obligation, beginning of period	$	26,882		$	17,485
Liabilities settled		-			(4,585	)
Accretion expense		2,352			2,076
Revisions		537			10,185
Foreign currency translation adjustment		(1,554	)		1,721
	$	28,217		$	26,882
Transfer to liabilities subject to compromise (Note 7)		(23,283	)		-
Present value of obligation, end of period	$	4,934		$	26,882
Less: current portion of asset retirement obligation		(479	)		(7,297	)
Long term portion of asset retirement obligation	$	4,455		$	19,585