Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

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Fair Value Measurements
 3 Months Ended
Sep. 30, 2011
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Text Block

Note 16 Fair Value Measurements

The Company follows authoritative guidance related to Fair Value Measurement and Disclosure, which establishes a three-level valuation hierarchy for disclosure of fair value measurements.  The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.  The three levels are defined as follows:

 

  • Level 1:  Quoted Prices in Active Markets for Identical Assets – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
  • Level 2:  Significant Other Observable Inputs – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
  • Level 3:  Significant Unobservable Inputs – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company's policy is to recognize transfers in/and or out of a fair value hierarchy as of the end of the reporting period for which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed for all periods presented.

Items required to be measured at fair value on a nonrecurring basis include the assets acquired and liabilities assumed related to the acquisition of an additional 2.95% working interest in Poplar Field and the contingent payments recorded pursuant to that transaction (see Note 4).

The Company's items to which recurring fair value measurements apply are securities available-for-sale, which are classified as Level 1 in the fair value hierarchy. These investments are traded in active markets and quoted prices are available for identical investments.

Cash balances were $9,033,547 as of September 30, 2011 and the remaining $16,689,669 was held in time deposit accounts in several Australian banks that have terms of 90 days or less, and are therefore classified as cash equivalents. The fair value of cash equivalents approximates carrying value due to the short term nature of those instruments.

The following table presents the amounts of assets carried at fair value at September 30, 2011 and June 30, 2011 by the level in which they are classified within the valuation hierarchy:

      Fair Value Measurements   Fair Value Measurements
      at September 30, 2011 using   at June 30, 2011 using
      Quoted Prices in Active   Quoted Prices in Active
      Markets for Identical Assets   Markets for Identical Assets
  Description   Level 1   Level 1
  Securities available-for-sale   $ 204,298   $ 238,070