Income Taxes

The effective tax rate is calculated as the amount of income tax expense divided by income before income tax expense. For the three and nine month periods ended September 30, 2016 and 2015, the Company’s effective tax rates were as follows:



	2016		2015
Three months ended September 30,	36.6	%	36.2	%
Nine months ended September 30,	37.7	%	37.6	%

The effective tax rate for the three and nine months ended September 30, 2016 was higher than the U.S. Federal tax rate of 35% primarily due to U.S. state tax expense while the effective rates for the prior year periods were higher than the statutory rate primarily due to certain discrete items that impacted income taxes in the period in addition to U.S. state tax expense.

The Company was included in Murphy Oil’s tax returns for the periods prior to the separation in multiple jurisdictions that remain subject to audit by taxing authorities. These audits often take years to complete and settle. As of September 30, 2016, the earliest year remaining open for Federal audit and/or settlement is 2012 and for the states it ranges from 2008-2011. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future periods from resolution of outstanding unsettled matters.