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Income Taxes
 12 Months Ended
Dec. 31, 2012
Income Taxes [Abstract]  
Income Taxes

9. Income Taxes

The components of the provision (benefit) for income taxes for the years ended December 31, 2012 and 2011 are as follows:

 

                 
    Year Ended December 31,  

(Thousands of dollars)

       2012             2011      

Current:

                

Federal

   $ 16     $ 503  

State

     (130 )      54  
   

 

 

    

 

 

  

Total current

     (114 )      557  

Deferred:

                

Federal

     7,009       522  

State

     (39 )      196  
   

 

 

    

 

 

  

Total deferred

     6,970       718  
   

 

 

    

 

 

  

Total income tax provision

   $ 6,856     $ 1,275  
   

 

 

    

 

 

  

 

The components of net deferred tax assets and liabilities are as follows:

 

                 
    At December 31,  

(Thousands of dollars)

   2012     2011  

Current Assets:

                

Accrued liabilities

   $ 613     $ 474  

Allowance for doubtful accounts

     124       148  

Derivative contracts

     (83 )      723  
   

 

 

    

 

 

  

Total current deferred income tax assets

   $ 654     $ 1,345  
   

 

 

    

 

 

  

Non-Current Assets:

                

Alternative minimum tax credits

   $ 5,890     $ 5,873  

Net operating loss carry-forwards

     114       161  

Percentage depletion carry-forwards

     4,287       2,946  

Derivative contracts

     91       520  
   

 

 

    

 

 

  

Total non-current assets

     10,382       9,500  

Non-Current Liabilities:

                

Basis differences relating to managed partnerships

     1,492       1,989  

Depletion and depreciation

     33,084       25,425  
   

 

 

    

 

 

  

Total non-current liabilities

     34,576       27,414  
   

 

 

    

 

 

  

Net non-current deferred income tax liabilities

   $ 24,194     $ 17,914  
   

 

 

    

 

 

  

The total provision for income taxes for the years ended December 31, 2012 and 2011 varies from the federal statutory tax rate as a result of the following:

 

                 
    Year Ended December 31,  

(Thousands of dollars)

       2012             2011      

Expected tax expense

   $ 7,450     $ 2,069  

State income tax, net of federal benefit

     (112 )      167  

Percentage depletion

     (902 )      (1,242 ) 

Other, net

     420       281  
   

 

 

    

 

 

  

Total income tax provision

   $ 6,856     $ 1,275  
   

 

 

    

 

 

  

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. Differences relating to oil and gas properties owned through Prime Offshore are reflected under “Depletion and depreciation,” while basis differences relating to the managed partnerships are reflected under “Basis differences relating to managed partnerships.”

The Company is entitled to percentage depletion on certain of its wells, which is calculated without reference to the basis of the property. To the extent that such depletion exceeds a property’s basis, it creates a permanent difference, which lowers the Company’s effective rate. The Company’s effective tax rates in 2012 and 2011 are lower than the statutory federal rate primarily due to percentage depletion deductions in excess of the Company’s basis in the property.

The Company has not recorded any provision for uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The 2004, 2005, 2006, and 2009 federal income tax returns have been audited by the Internal Revenue Service, while the 2010 and 2011 returns remain open for examination. Returns for unexamined earlier years may be examined and adjustments made to the amount of percentage depletion carryforwards flowing from those years into an open tax year, although in general no assessment of income tax may be made for those years on which the statute has closed. State returns for the years 2009, 2010 and 2011 remain open for examination by the relevant taxing authorities.