XML 44 R18.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes On December 22, 2017, the President signed into law Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act, following its passage by the U.S. Congress (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%; (2) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (3) eliminating the corporate AMT and changing how existing AMT credits can be realized; (4) creating a new limitation on deductible interest expense; and (5) making changes to the deductibility of executive compensation. Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”) provides that when deferred tax accounts are adjusted for the effect of a change in tax laws or rates, the effect shall be included in income from continuing operations for the period that includes the enactment date. As a result, the Company recorded a tax benefit of $171.9 million during the fourth quarter of 2017. This amount represents the estimated impact of the rate change on the deferred tax liability in existence as of the date of enactment of the Tax Act and is included in Tax expense (benefit) on the Company’s Consolidated Statements of Operations. In January 2018, the Securities and Exchange Commission (“SEC”) staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the enactment of the Tax Act for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act. The Company is currently evaluating the full impact the Tax Act will have on its financial position, cash flows and results of operations. If the Company’s analysis was not yet complete but was able to make reasonable estimates of the effects of the Tax Act, the Company recorded provisional adjustments. If the Company was not yet able to make reasonable estimates of the impact of certain elements of the Tax Act, the Company has not recorded any adjustments related to those elements and has continued accounting for those elements in accordance with ASC 740 on the basis of the tax laws in effect before the enactment of the Tax Act. Effective as of January 1, 2018, the Tax Act reduced the corporate tax rate to 21%. The Company was able to make reasonable estimates of the impact of the tax rate change on its deferred tax liability, and in accordance with the Tax Act, the Company recorded a provisional benefit of $171.9 million for the year ending December 31, 2017. While the Company was able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analysis related to the Tax Act, including, but not limited to, clarification of the Tax Act impact on certain executive compensation. As such, the Company has not completed its accounting for the income tax effects of the Tax Act on the deferred tax asset related to performance-based compensation. Therefore, the Company has not recorded any adjustments related to those elements and has accounted for those elements in accordance with ASC 740 on the basis of the tax laws in effect before the enactment of the Tax Act. In addition to the disclosures required by ASC 740, SAB 118 requires companies to disclose information about the material financial reporting impacts of the Tax Act for which the accounting under ASC 740 is incomplete as of the reporting date. The Company’s income tax effects of the Tax Act for which the accounting is incomplete include the impacts of the tax rate change on the Company’s overall deferred tax liability and the deferred tax asset related to certain executive compensation. The Company has reported a provisional amount for the effect of the tax rate change. The existing deferred tax asset related to compensation amounts for which the income tax effects of the Tax Act have not been completed is $3.1 million. The Company’s accounting is incomplete due to further clarification needed on the grandfather provisions related to certain performance-based compensation awards outstanding on November 22, 2017. The Company’s income tax benefit consists of the following:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
| (In thousands)
Current: |  |  |  |  |
Federal | $ | (420 | ) |  | $ | — |  |  | $ | (9 | )
State | — |  |  | — |  |  | — |
| (420 | ) |  | — |  |  | (9 | )
Deferred: |  |  |  |  |
Federal | (199,370 | ) |  | (117,781 | ) |  | (11,667 | )
State | (3,514 | ) |  | (10,757 | ) |  | (4,447 | )
| (202,884 | ) |  | (128,538 | ) |  | (16,114 | )
Total income tax benefit | $ | (203,304 | ) |  | $ | (128,538 | ) |  | $ | (16,123 | )
The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to the Company’s effective tax rate for the years ended December 31, 2017, 2016 and 2015, is set forth below:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
| (%) |  | (In thousands) |  | (%) |  | (In thousands) |  | (%) |  | (In thousands)
U.S. federal tax statutory rate | 35.00 | % |  | $ | (26,550 | ) |  | 35.00 | % |  | $ | (130,044 | ) |  | 35.00 | % |  | $ | (19,730 | )
Non-controlling interest | 1.68 | % |  | (1,278 | ) |  | — | % |  | — |  |  | — | % |  | — |
State income taxes, net of federal income tax benefit | 2.59 | % |  | (1,966 | ) |  | 2.27 | % |  | (8,435 | ) |  | 5.11 | % |  | (2,883 | )
Non-deductible executive compensation | 1.05 | % |  | (792 | ) |  | (0.21 | )% |  | 796 |  |  | (0.94 | )% |  | 528 |
Non-deductible equity-based compensation windfall (shortfall) | 0.87 | % |  | (659 | ) |  | (1.83 | )% |  | 6,808 |  |  | (10.17 | )% |  | 5,734 |
Tax reform rate change | 226.61 | % |  | (171,900 | ) |  | — | % |  | — |  |  | — | % |  | — |
Other | 0.21 | % |  | (159 | ) |  | (0.64 | )% |  | 2,337 |  |  | (0.40 | )% |  | 228 |
Annual effective tax benefit | 268.01 | % |  | $ | (203,304 | ) |  | 34.59 | % |  | $ | (128,538 | ) |  | 28.60 | % |  | $ | (16,123 | )
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017 and 2016, were as follows:
| Year Ended December 31,
| 2017 |  | 2016
| (In thousands)
Deferred tax assets |  |  |
Net operating loss carryforward | $ | 182,633 |  |  | $ | 228,279 |
Bonus and equity-based compensation | 10,100 |  |  | 9,483 |
Derivative instruments | 30,397 |  |  | 25,738 |
Other tax attribute carryovers | 1,099 |  |  | 1,712 |
Total deferred tax assets | 224,229 |  |  | 265,212 |
Less: Valuation allowance | (1,159 | ) |  | (1,344 | )
Net deferred tax assets | 223,070 |  |  | 263,868 |
Deferred tax liabilities |  |  |
Oil and natural gas properties | 485,132 |  |  | 744,977 |
Investment in partnerships | 25,490 |  |  | — |
Other deferred tax liabilities | 18,369 |  |  | 32,420 |
Total deferred tax liabilities | 528,991 |  |  | 777,397 |
Total net deferred tax liabilities | $ | 305,921 |  |  | $ | 513,529 |
The Company generated a federal net operating tax loss of $100.7 million for the year ended December 31, 2017. The net operating loss carryforwards consist of $764.1 million of federal net operating loss carryforwards, which expire between 2030 and 2037, and $622.1 million of state net operating loss carryforwards, which expire between 2018 and 2037. The tax benefits of carryforwards are recorded as an asset to the extent that management assesses the utilization of such carryforwards to be more likely than not. When the future utilization of some portion of the carryforwards is determined not to be more likely than not, a valuation allowance is provided to reduce the recorded tax benefits from such assets. During the years ended December 31, 2017 and 2016, the Company recorded a valuation allowance of $0.8 million and $0.8 million for Montana net operating losses, respectively, and $0.3 million and $0.6 million for federal charitable contribution carryovers, respectively, based on management’s assessment that it is more likely than not that these net deferred tax assets will not be realized prior to their expiration due to their short carryover periods, current economic conditions and expectations for the future. In 2017, the valuation allowances for Montana net operating losses decreased primarily as a result of expirations of certain Montana net operating losses, offset by an increase due to the tax rate change pursuant to the Tax Act on the remaining valuation allowance. In 2017, the valuation allowances for federal charitable contribution carryovers decreased primarily as a result of expirations of certain federal charitable contribution carryovers and by the tax rate change pursuant to the Tax Act on the remaining valuation allowance. Management determined that no additional valuation allowances were required for Montana net operating losses and for federal charitable contribution carryovers. In addition, no valuation allowances were required for its U.S. federal and North Dakota tax net operating loss carryforwards as they are expected to be fully utilized before their expiration. Due to the adoption of ASU 2016-09, unrealized excess tax benefits of $10.6 million were realized in the cumulative-effect adjustment to retained earnings on the Company’s Condensed Consolidated Balance Sheet in the first quarter of 2017 and increased the deferred tax asset. Accounting for uncertainty in income taxes prescribes a recognition threshold and measurement methodology for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As of December 31, 2017, the Company had no unrecognized tax benefits. With respect to income taxes, the Company’s policy is to account for interest charges as interest expense and any penalties as tax expense in its Consolidated Statements of Operations. The Company files income tax returns in the U.S. federal jurisdiction and in North Dakota, Montana and Texas. The statute of limitation for the year ended December 31, 2017 will expire in 2020. The Company’s earliest open year in its key jurisdictions is 2014 for both the U.S. federal jurisdiction and various U.S. states, however, net operating losses originating in 2010 and all subsequent periods are subject to examination when utilized.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration