INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

Our provision for income taxes comprised the following (expense) benefit during the years ended December 31:

	2014			2013
Current:
Federal	$	-		$	(109,000	)
State		(1,000	)		(20,070	)
Total current		(1,000	)		(129,070	)

Deferred:
Federal		1,008,000			(590,000	)
State		10,506			(48,000	)
Total deferred		1,018,506			(638,000	)

Total income tax provision	$	1,017,506		$	(767,070	)

Reconciliation of Tax Rate

Total income tax (expense) benefit differed from the amounts computed by applying the U.S. Federal statutory tax rates and estimated state rates to pre-tax income for the years ended December 31, 2014 and 2013 as follows:

	2014			2013
Statutory rate (benefit)		(34	%)		34	%
State taxes, net of federal benefit		0	%		3	%
Effective rate (benefit)		(34	%)		37	%

Components of Deferred Tax Assets and Liability

Significant components of net deferred tax assets and liabilities are:

	December 31,
	2014			2013
Deferred tax assets:
Asset retirement obligation	$	640,000		$	393,000
Allowance for doubtful accounts		63,000			63,000
Stock compensation and other		34,000			-
Unrealized loss on commodity derivatives		-			1,000
Alternative minimum tax credit carryforward		128,000			80,000
Net operating loss carryforward		1,001,000			-
Total deferred tax assets		1,866,000			537,000

Deferred tax liability:
Difference in depreciation, depletion and capitalization methods – oil and gas properties		(3,832,000	)		(3,446,000	)
Total deferred tax liabilities		(3,832,000	)		(3,446,000	)

Net deferred tax liability	$	(1,966,000	)	$	(2,909,000	)

Net Deferred Tax Assets and Liabilities, Balance Sheet Location

Our net deferred tax assets and liabilities are recorded as follows:

	2014			2013
Current asset	$	98,000		$	64,000
Non-current liability		(2,064,000	)		(2,973,000	)
Total	$	(1,966,000	)	$	(2,909,000	)