TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Reconciliation of the statutory federal income tax

The following table sets forth a reconciliation of the statutory federal income tax for the years ending December 31, 2012 and 2011.

	2012			2011

Income (loss) before income taxes	$	(56,540,526	)	$	(5,906,190	)
Income tax expense (benefit) computed at statutory rates		(19,223,779	)	$	(2,008,105	)
Permanent differences, nondeductible expenses		282,547			9,611
Current Colombian tax expense		216,923			10,266
Increase (decrease) in valuation allowance		22,026,880			755,159
Valuation allowance (decrease) related to carryback		(3,345,683	)
Change in tax rate					55,795
Return to accrual items		—			—
Foreign tax credit		—			—
Other adjustment		260,035			—
State (net of federal benefit)		—			1,980
Tax provision (benefit)	$	216,923		$	(1,175,294	)
Total Provision
Current Federal	$	(3,195,583	)	$	20,211
Current State		—			3,000
Deferred Federal		3,195,583			(1,198,505	)
Deferred State					—
Foreign		216,923			—
Total provision (benefit)	$	216,923		$	(1,175,294	)

Significant components of the deferred tax asset and liability

The tax effects of the temporary differences between financial statement income and taxable income are recognized as a deferred tax asset and liabilities. Significant components of the deferred tax asset and liability as of December 31, 2012 and 2011 are set out below.

	2012		2011
Non-Current Deferred tax assets:
Net operating loss carry forwards	$	12,964,068	$	1,016,960
Foreign tax credit carry forwards		4,133,956		110,351
Deferred state tax		66,505		66,505
Stock compensation		3,000,568		2,312,689
Book in excess of tax depreciation, depletion, and capitalization methods on oil and gas properties		(271,419)		805,625
Other		(95,738)		(1,361)
Colombia future tax obligations		—		—
Total Non-Current Deferred tax assets		19,797,940		4,310,769

Valuation Allowance		(19,797,940)		(1,115,186)

Net deferred tax asset	$	—	$	3,195,583