Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE 10 - INCOME TAXES

The tax effects of temporary differences that gave rise to the deferred tax liabilities and deferred tax assets as of December 31, 2011 and 2010 were:

	2011			2010
Deferred tax assets:
Oil and gas properties and equipment	$	(515,123	)	$	(1,335,490	)
Net operating loss carry-forward		11,291,513			7,285,426
Share based compensation		4,675,241			3,902,007
Abandonment obligation		205,145			188,728
Derivative instruments		176,514			148,384
Other		(91,304	)		(30,896	)
Total deferred tax asset		15,741,986			10,158,159
Valuation allowance		(15,741,986	)		(10,158,159	)
Net deferred tax asset	$	-		$	-

Reconciliation of the Company’s effective tax rate to the expected federal tax rate is:

	2011			2009
Effective federal tax rate		35.00	%		35.00	%
Effect of permanent differences		-7.54	%		-21.78	%
State tax rate		2.20	%		2.20	%
Change in rate		0.00	%		-0.23	%
Other		0.00	%		3.07	%
Valuation allowance		-29.66	%		-18.26	%
Net		0	%		0	%

At December 31, 2011 and 2010, the Company had net operating loss carry-forwards for federal income tax purposes of approximately $25,957,000 and $19,582,000, respectively,that may be offset against future taxable income. The Company has established a valuation allowance for the full amount of the deferred tax assets as management does not currently believe that it is more likely than not that these assets will be recovered in the foreseeable future. To the extent not utilized, the net operating loss carry-forwards as of December 31, 2011 will expire in 2031.