XML 40 R23.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s income tax benefit consists of the following (in thousands):
SuccessorPredecessor
 Year Ended December 31, 2021Period from November 20, 2020 through
December 31, 2020		Period from January 1, 2020 through
November 19, 2020		Year Ended December 31, 2019
 
Current:
Federal$— $— $(36)$(43)
State4 — — 27 
4 — (36)(16)
Deferred:
Federal(977)(2,918)(221,277)(28,148)
State— (529)(41,649)(4,551)
(977)(3,447)(262,926)(32,699)
Total income tax benefit$(973)$(3,447)$(262,962)$(32,715)
The reconciliation of income taxes calculated at the U.S. federal tax statutory rate to the Company’s effective tax rate is set forth below: 
SuccessorPredecessor
 Year Ended December 31,Period from November 20, 2020 through
December 31, 2020		Period from January 1, 2020 through
November 19, 2020		Year Ended December 31,
 20212019
 (%)(In thousands)(%)(In thousands)(%)(In thousands)(%)(In thousands)
U.S. federal tax statutory rate21.0 %$74,412 21.0 %$(10,376)21.0 %$(837,391)21.0 %$(25,906)
State income taxes, net of federal income tax benefit2.6 %9,161 2.8 %(1,373)2.3 %(93,063)2.9 %(3,573)
Effects of non-controlling interest(2.1)%(7,496)1.7 %(830)(0.4)%17,699 6.4 %(7,895)
Non-deductible executive compensation0.7 %2,510 — %— — %1,372 (1.7)%2,094 
Equity-based compensation windfall (shortfall)— %— — %— (0.2)%8,687 (1.8)%2,163 
Change in valuation allowance(46.8)%(165,639)(18.1)%8,936 (13.9)%553,580 — %— 
Discharge of debt and other reorganization items24.6 %87,070 (0.5)%232 (2.1)%85,149 — %— 
Other(0.3)%(991)0.1 %(36)— %1,005 (0.3)%402 
Annual effective tax benefit(0.3)%$(973)7.0 %$(3,447)6.7 %$(262,962)26.5 %$(32,715)
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2021 and 2020, were as follows:
 December 31,
 20212020
 (In thousands)
Deferred tax assets
Net operating loss carryforward$51,942 $34,691 
Oil and natural gas properties237,051 566,856 
Bonus and equity-based compensation6,718 1,732 
Derivative instruments91,213 22,248 
Investment in partnerships12,924 — 
Other deferred tax assets14,843 7,424 
Total deferred tax assets414,691 632,951 
Less: Valuation allowance(399,770)(565,409)
Total deferred tax assets, net$14,921 $67,542 
Deferred tax liabilities
Investment in partnerships— 67,210 
Other deferred tax liabilities14,928 1,316 
Total deferred tax liabilities$14,928 $68,526 
Total deferred tax liabilities, net$7 $984 
As of December 31, 2021, the Company had gross U.S. federal net operating loss carryforwards of $219.8 million and $169.6 million of gross state net operating loss carryforwards, which expire between 2028 and 2041. 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, and 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. As of December 31, 2021 and 2020, the Company’s valuation allowance balance was $399.8 million and $565.4 million, respectively. The Company concluded it is more likely than not that some or all of the benefits from its deferred tax assets will not be realized, and as such, recorded a valuation allowance on these assets as of December 31, 2021 and 2020. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize the benefit of deferred tax assets. A significant piece of objective negative evidence evaluated is the cumulative loss incurred over recent years. Such objective negative evidence limits the ability to consider other subjective positive evidence. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as future growth. The Company will continue to assess the valuation allowance on an ongoing basis.
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, 2021 and 2020, 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 Company has carried forward NOLs from previous years to utilize in 2021, which will allow the IRS to examine the loss years, the earliest of which is 2010. The federal statute of limitation for the year ended December 31, 2021 will expire in 2025.
Upon emergence from bankruptcy, the Company experienced an “ownership change” as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). Under Section 382 of the Code, the Company’s net operating loss carryforwards and other tax attributes (collectively, the “Tax Benefits”) are potentially subject to various limitations going forward. However, the Company believes that it qualified for, and as a result, utilized an exception under Section 382(l)(5) of the Code from the limitation that would otherwise be imposed under Section 382 of the Code. However, if the Company were to experience a subsequent ownership change within the two year period immediately following its emergence from bankruptcy, the Company would be precluded from utilizing any remaining pre-emergence NOLs following such subsequent ownership change. Prior to determining it could utilize the exception under Section 382(l)(5) of the Code, the Company made an estimated U.S. federal income tax payment of $20.0 million during the second quarter of 2021, which the Company expects to be refunded in 2022. This amount is recorded under accounts receivable, net on the Consolidated Balance Sheet at December 31, 2021.