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FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1995

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. Provision for Income Taxes

 

The Omnibus Budget Reconciliation Act of 1993 (the "Act") was enacted on August 10, 1993. The Act contains several changes to federal income tax provisions, including an increase in the highest corporate tax rate from 34% to 35%, for companies with taxable income in excess of $10,000,000. The effect of the Act on income tax expense for the year ended December 31, 1993, and the Company's net deferred tax liability was not material.

The following is an analysis of the consolidated income tax provision:

Year ended December 31,
1995 1994 1993
------------ ------------ ------------
Current $ (344,137) $ 148,834 $ 533,298
Deferred 2,326,162 963,324 1,199,057
------------ ------------ ------------
Total $ 1,982,025 $ 1,112,158 $ 1,732,355
=========== =========== ===========

 

There are differences between income taxes computed using the statutory rate (34% for 1995, 1994, and 1993) and the Company's effective income tax rates (28.7%, 23.0%, and 26.1% for 1995, 1994, and 1993, respectively), primarily as the result of certain tax credits available to the Company. Reconciliations of income taxes computed using the statutory rate to the effective income tax rates are as follows:

1995 1994 1993
Income taxes computed at federal statutory rate $ 2,344,143 $ 1,644,862 $ 2,253,727
State tax provisions, net of federal benefits 84,202 46,525 149,002
Nonconventional fuel source credit (370,000) (435,016) (553,651)
Depletion deductions in excess of basis (34,000) (30,895) (98,596)
Other, net (42,320) (113,318) (18,127)
------------ ------------ ------------
Provision for income taxes $ 1,982,025 $ 1,112,158 $ 1,732,355
=========== =========== ===========

 

The tax effects of significant temporary differences representing the net deferred tax liability at December 31, 1995, 1994, and 1993 were as follows:

1995 1994 1993
Deferred tax assets:
   Alternative minimum tax credits $ 1,372,978 $ 900,562 $ 786,774
   Other 115,332 7,112 231,292
--------------- --------------- ---------------
      Total deferred tax assets $ 1,488,310 $ 907,674 $ 1,018,066
Deferred tax liabilities:
   Oil and gas properties $ 7,682,701 $ 4,811,886 $ 12,576,208
   Other 650,283 614,300 637,527
---------------- ---------------- ----------------
      Total deferred tax assets $ 8,332,984 $ 5,426,186 $ 13,213,735
---------------- ---------------- ----------------
Net deferred tax liability(1) $ 6,844,674 $ 4,518,512 $ 12,195,669
============ ============ ============

      (1)This amount includes current deferred tax asset amounts of $115,332, $103,679, and $96,567 for 1995, 1994, and 1993, respectively.

The Company did not record any valuation allowances against deferred tax assets at December 31, 1995, 1994, and 1993.

At December 31, 1995, the Company had an alternative minimum tax carryforward of $1,372,978 indefinitely available to reduce future regular tax liability to the extent it exceeds the related tentative minimum tax otherwise due.


 
 

 

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