Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.6
Fair Value Measurements
 6 Months Ended
Dec. 31, 2011
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Text Block

Note 15 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 3% working interest in Poplar (see Note 4), and liabilities related to AROs.

Items required to be measured at fair value on a recurring basis include securities available for sale, classified as Level 1, and contingent payments (see Note 4), classified as Level 3.

Cash balances were $1,999,784 as of December 31, 2011, and the remaining $16,824,214 was held in time deposit accounts in several Australian banks that have terms of 90 days or less, and are therefore classified as cash and 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 December 31, 2011, and June 30, 2011 by the level in which they are classified within the valuation hierarchy:

    December 31, 2011
    Level 1   Level 2   Level 3   Total
Assets                        
Securities available for sale   $ 146,968   $ -   $ -   $ 146,968
Liabilities                        
Contingent liability   $ -   $ -   $ 4,232,000   $ 4,232,000
                         
    June 30, 2011
    Level 1   Level 2   Level 3   Total
Assets                        
Securities available for sale   $ 238,070   $ -   $ -   $ 238,070
Liabilities                        
Contingent liability   $ -   $ -   $ -   $ -