NOTE 10 — INCOME TAXES:

An analysis of our deferred taxes follows:


	As of December 31,
	2012			2011
Tax effect of temporary differences:
Oil and gas properties – full cost	($	465,862	)	($	381,413	)
Asset retirement obligations		175,788			153,281
Stock compensation		5,588			4,962
Hedges		(16,983	)		(12,882	)
Alternative minimum tax credit carryforward		—			5,358
Other		6,153			8,931

	($	295,316	)	($	221,763	)

We estimate that we have approximately $15,022, ($20,386) and $5,808 of current federal income tax expense (benefit) for the years ended December 31, 2012, 2011 and 2010, respectively. We have a $10,027 and $19,946 current income tax receivable at December 31, 2012 and 2011, respectively.

A reconciliation between the statutory federal income tax rate and our effective income tax rate as a percentage of income before income taxes follows:


	Year Ended December 31,
	2012			2011			2010
Income tax expense computed at the statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State taxes		1.0			1.0			1.0
IRC Sec. 162(m) limitation		0.6			0.3			—
Other		(0.5	)		(0.3	)		0.9

Effective income tax rate		36.1	%		36.0	%		36.9	%

In 2012 and 2010, we recognized a tax deduction for domestic production activities pursuant to Internal Revenue Code Section 199.

Income taxes allocated to accumulated other comprehensive income related to oil and gas hedges amounted to $3,918, $20,290 and $292 for the years ended December 31, 2012, 2011 and 2010, respectively.

As of December 31, 2012 and 2011, we had unrecognized tax benefits of $385. If recognized, all of our unrecognized tax benefits as of December 31, 2012 would impact our effective tax rate. A reconciliation of the total amounts of unrecognized tax benefits follows:


Total unrecognized tax benefits as of December 31, 2011	$	385
Increases (decreases) in unrecognized tax benefits as a result of:		—
Tax positions taken during a prior period		—
Tax positions taken during the current period		—
Settlements with taxing authorities		—
Lapse of applicable statute of limitations		—

Total unrecognized tax benefits as of December 31, 2012	$	385

Our unrecognized tax benefits pertain to proposed state income tax audit adjustments. We believe that our unrecognized tax benefits may be reduced to zero within the next 12 months upon completion and ultimate settlement of the state exams or litigation.

It is our policy to classify interest and penalties associated with underpayment of income taxes as interest expense and general and administrative expenses, respectively. We have recognized $27, $25 and ($1,157) of interest expense related to uncertain tax positions for the years ended December 31, 2012, 2011 and 2010, respectively. We have not recognized any penalties in connection with our uncertain tax positions. The liabilities for unrecognized tax benefits and accrued interest payable are components of other current liabilities on our balance sheet.

The tax years 2008 through 2011 remain subject to examination by major tax jurisdictions.