Under the full cost method, the Company is subject to a ceiling test to determine if there is an impairment to the proved properties. The impairment amount is the excess of capitalized costs over the present value, discounted at 10, of the estimated future net cash flows from the proven oil and gas reserves plus the cost, or estimated fair market value. The Company did not incur impairment costs for the years ended October 31, 2011 and 2010, respectively.