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Income Taxes
 6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
Note 18—Income Taxes
Our effective tax rate for the three-month periods ended June 30, 2022 and 2021 was 32.8 percent and 32.1 percent, respectively, and our effective tax rate for the six-month periods ended June 30, 2022 and 2021 was 29.9 percent and 35.9 percent, respectively. Our effective tax rate for the first six-months of 2022 was impacted by the shift of income among our taxing jurisdictions, the release of tax reserves related to the closing of an IRS audit, a change to our valuation allowance, and the impact of the interest deduction related to our debt exchange, as described below.

In the first quarter of 2022, the IRS closed the 2017 audit of our U.S. federal income tax return. As a result, we recognized federal and state tax benefits totaling $515 million relating to the recovery of outside tax basis previously offset by a full reserve.

During the second quarter of 2022, Norway enacted changes to the Petroleum Tax System. As a result of the enactment, a valuation allowance of $58 million was recorded during the quarter to reflect changes to our ability to realize certain deferred tax assets under the new law.

For the three- and six-month periods of 2022, our valuation allowance increased by $58 million and $5 million, respectively, compared to a decrease of $87 million and $151 million for the same periods of 2021. The increase in the three- and six-month periods of 2022 relate to the Norway tax law change described above. In addition, our six-month periods of 2022 and of 2021 include impacts from changes in our valuation allowance related to the fair value measurement of our CVE common shares and our expectation of the tax impact related to incremental capital gains and losses.

Our 2022 and 2021 effective tax rates were adversely impacted by $37 million and $75 million, respectively, due to incremental interest deductions from debt exchanges in both periods offsetting U.S. foreign source revenue that would otherwise have been offset by foreign tax credits. See Note 6.

The Company has ongoing income tax audits in a number of jurisdictions. The government agents in charge of these audits regularly request additional time to complete audits, which we generally grant, and conversely occasionally close audits unpredictably. Within the next twelve months we may have audit periods close that could significantly impact our total unrecognized tax benefits. The amount of such change is not estimable but could be significant when compared with our total unrecognized tax benefits.