Income Taxes

9 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

7. Income Taxes

A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax asset will not be realized. To assess that likelihood, we use estimates and judgment regarding our future taxable income, and we consider the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include our current financial position, our results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as the current and forecasted business economics of our industry.

Based on the material write-downs of the carrying value of our oil and natural gas properties we project being in a net deferred tax asset position at March 31, 2016. Our deferred tax asset is $655,551 as of December 31, 2015 with a valuation amount of $655,551. We believe it is more likely than not that these deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of deferred tax assets. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as future expected growth.

The income tax provision consists of the following for the three and nine months ended December 31, 2015 and 2014:

	Three Months Ended						Nine Months Ended
	December 31						December 31
	2015			2014			2015			2014
Current income tax	$	-		$	-		$	-		$	-
Deferred income tax benefit		(147,539	)		(13,856	)		(660,870	)		(21,759	)
Total income tax provision:	$	(147,539	)	$	(13,856	)	$	(660,870	)	$	(21,759	)
Effective tax rate		(6	%)		(7	%)		(16	%)		(24	%)

The change in our effective tax rate was impacted by the application of graduated rates, permanent differences and statutory depletion for the nine months ended December 31, 2015.