XML 72 R11.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Taxes |
5. | INCOME TAXES
The Company and its domestic subsidiaries file a consolidated United States income tax return. Certain subsidiaries’ operations are also subject to foreign income taxes. Provision for income taxes consists of the following:
(in thousands) | Year Ended December 31, |
| 2013 |  |  | 2012 |  |  | 2011 |
U.S. Federal: |  |  |  |  |  |  |  |  |  |  |
Current | $ | - |  |  | $ | - |  |  | $ | - |
Deferred |  | - |  |  |  | - |  |  |  | - |
Foreign: |  |  |  |  |  |  |  |  |  |  |
Current |  | 34,115 |  |  |  | 81,813 |  |  |  | 93,468 |
Deferred |  | - |  |  |  | - |  |  |  | - |
Total | $ | 34,115 |  |  | $ | 81,813 |  |  | $ | 93,468 |
The primary differences between the financial statement and tax bases of assets and liabilities at December 31, 2013 and 2012 are as follows: (In thousands)
| 2013 |  |  | 2012 |
Deferred Tax Assets: |  |  |  |  |  |  |
Basis difference in fixed assets | $ | 31,440 |  |  | $ | 30,619 |
Foreign tax credit carry forward |  | 55,908 |  |  |  | 23,836 |
Alternative minimum tax credit carryover |  | 1,349 |  |  |  | 1,349 |
Foreign net operating losses |  | 42,688 |  |  |  | 38,782 |
Asset retirement obligations |  | 4,012 |  |  |  | 3,629 |
Other |  | 3,300 |  |  |  | 2,731 |
| $ | 138,697 |  |  | $ | 100,946 |
Valuation allowance |  | (137,348 | ) |  |  | (99,597 | )
Total deferred tax asset | $ | 1,349 |  |  | $ | 1,349 |
The Company’s unused foreign tax credits will start to expire between the years 2017 and 2023. The alternative minimum tax credits do not expire, and foreign net operating losses (“NOL”) are not subject to expiry dates. The NOL for the Company’s UK subsidiary can be carried forward indefinitely, while the NOLs for the Company’s Gabon and Angola subsidiaries are included in the respective subsidiaries’ cost oil accounts, which will be offset against future taxable revenues. Management assesses the available positive and negative evidence to estimate if existing deferred tax assets will be utilized. The Company does not anticipate utilization of the foreign tax credits prior to expiration nor does the Company expect to generate sufficient taxable income to utilize other deferred tax assets. On the basis of this evaluation, a valuation allowance of $137.3 million and $99.6 million has been recorded as of December 31, 2013 and 2012, respectively, to reduce the deferred tax asset to the amount that is more likely than not to be realized. Under U.S. tax law, certain foreign taxes paid under arrangements such as the Company’s Production Sharing Contracts (“PSCs”) may not be eligible to be claimed as foreign tax credits and are instead treated as deductible royalties. During the year, the Company engaged outside advisors to analyze the facts and circumstances surrounding the creditability of the foreign taxes paid to the Republic of Gabon pursuant to its PSC. Based on the advice provided by these outside advisors, the Company has revised its estimate of foreign tax credit carryovers to reflect an increase of $28.0 million. The increase in deferred tax asset for foreign tax credits was fully offset by an increase in the valuation allowance. Pretax income (loss) is comprised of the following:
(in thousands) | Year Ended December 31, |
| 2013 |  |  | 2012 |  |  | 2011 |
United States | $ | (17,649 | ) |  | $ | (56,979 | ) |  | $ | (16,282 | )
Foreign |  | 94,836 |  |  |  | 144,131 |  |  |  | 150,312 |
| $ | 77,187 |  |  | $ | 87,152 |  |  | $ | 134,030 |
The statutory rate reconciliation is as follows:
(In Thousands) | Year Ended December 31, |
| 2013 |  |  | 2012 |  |  | 2011 |
Tax Provision Computed at Statutory Rate |  | 27,015 |  |  | $ | 30,503 |  |  | $ | 46,911 |
Foreign taxes not offset in U.S. by foreign tax credits |  | (2,072 | ) |  |  | 25,266 |  |  |  | 28,414 |
Permanent Differences |  | 973 |  |  |  | 2,370 |  |  |  | - |
Foreign Tax Credit Adjustments |  | (28,027 | ) |  |  |  |  |  |  |  |
Change in Tax Rate on Deferred |  | (0 | ) |  |  | 0 |  |  |  | -2,889 |
Increase/(Decrease) in Valuation Allowance |  | 37,752 |  |  |  | 23,675 |  |  |  | 22,038 |
Other |  | (1,526 | ) |  |  | (0 | ) |  |  | -1,006 |
Total Tax Expense | $ | 34,115 |  |  | $ | 81,813 |  |  | $ | 93,468 |
At December 31, 2013, the Company was subject to foreign and United States federal taxes only, with no allocations made to state and local taxes. The following table summarizes the tax years that remain subject to examination by major tax jurisdictions:
United States | 2008-2013
Gabon | 2007-2013

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration