The total change in the net non-current deferred liability from 2006 to 2007 was $89.8 million. This increase is primarily attributable to an $88.2 million increase in the deferred liability for accelerated tax deductions for oil and natural gas exploration and development costs.

Current deferred tax assets increased by $5.7 million, primarily due to alternative minimum tax credits of $5.1 million that are expected to be utilized during 2008. Changes in market prices for oil and natural gas along with other economic and operational factors could result in the current deferred tax assets not being fully utilized to reduce 2008 income taxes.

The primary non-current deferred tax assets are $4.3 million for State of Louisiana net operating loss carryovers. These loss carryforwards are scheduled to expire between 2013 and 2020.

Unrealized stock compensation accounts for $2.4 million in current deferred tax assets and $1.3 million in non-current deferred tax assets. These amounts are attributable to stock compensation expenses accrued for employee stock options and restricted stock that are not realized for income tax purposes until exercised (for stock options) or vested (for restricted stock). The actual tax deductions realized may be significantly different than the accrued amounts depending on the market value of the stock on the date of exercise or vesting.

There is also a deferred tax asset of $1.1 million for a capital loss carryforward which is fully offset by a valuation allowance. This carryover is scheduled to expire in 2010. At the end of 2006 the Company had total capital loss carryforward assets of $6.1 million which included $5.0 million that expired at the end of 2007. At the end of 2006, the tax asset net of valuation allowances was $2.4 million. During 2007, the Company elected not to pursue previously planned property dispositions that would have utilized these loss carryforwards. Accordingly, tax expense was increased in 2007 to adjust for the carryovers that expired and to reserve a full valuation allowance against the unexpired portion.

On January 1, 2007, we adopted the recognition and disclosure provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" ("FIN 48"). Under FIN 48, tax positions are evaluated for recognition using a more-likely-than-not threshold, and those tax positions requiring recognition are measured as the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. As a result of adopting FIN 48, we reported a $1.0 million decrease to our January 1, 2007 retained earnings balance and a corresponding increase to our other long-term liabilities.

The $1.0 million decrease is also the total balance of our unrecognized tax benefits, which would impact our effective tax rate if recognized. We do not anticipate any significant increases or decreases in unrecognized tax benefits during 2008. Our policy is to record interest and penalties relating to income taxes in income tax expense. As of December 31, 2007, no interest or penalties relating to income taxes have been incurred or recognized. Our cumulative interest exposure on unrecognized tax benefits is not material.

There were no changes to unrecognized tax benefits recorded during 2007.

Our U.S. Federal and State of Louisiana income tax returns from 1998 forward, our New Zealand income tax returns after 2001, and our Texas franchise tax returns after 2005 remain subject to examination by the taxing authorities. There are no unresolved items related to periods previously audited by these taxing authorities. No other state returns are significant to our financial position.