Property and Equipment

12 Months Ended

Dec. 31, 2011

6. Property and Equipment

The amounts capitalized as oil and natural gas properties were incurred for the purchase, exploration and ongoing development of various properties.

	December 31, 2011 $			December 31, 2010 $

Oil and natural gas properties (using the full-cost method)
Unproved properties		43,540,400			47,715,032
Proved properties		30,348,218			17,702,000
Total oil and natural gas properties		73,888,618			65,417,032
Building		889,609			889,609
Computer, office and other equipment		625,277			602,917
Total property and equipment		75,403,504			66,909,558
Accumulated impairment of oil and gas properties		(30,757,015	)		(23,887,015	)
Accumulated depletion of oil and gas properties		(1,394,200	)		(1,060,700	)
Accumulated depreciation of equipment		(672,184	)		(586,163	)
Total property and equipment, net		42,580,105			41,375,680

The oil and natural gas properties consist of contract interests in 10 exploration blocks in India, 3 exploration licenses held in Israel and 2 exploration licenses held in Colombia.

The Company has capitalized $604,917 (2010 - $599,234) of general and administrative costs directly related to exploration activities, including $234,568 (2010 - $252,335) of stock-based compensation expense. In addition, the Company has capitalized $40,088 (2010 - $56,943) of support equipment depreciation.

Impairment of Oil and Gas Properties

The Company performed a ceiling test calculation at December 31, 2011, to assess the ceiling limitation of its proved oil and natural gas properties. At December 31, 2011, the Company's net capitalized cost proved oil and natural gas properties did exceed the ceiling test. Accordingly, for the year ended December 31, 2011, the Company charged $6,870,000 (December 31, 2010 - $13,789,000 and December 31, 2009 - $nil) to the statement of operations for impairment charges. The impairment charge of $6,870,000 was recognized in the fourth quarter of 2011 as a result of ceiling limitation as at December 31, 2011.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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