XML 48 R22.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s income tax expense (benefit) from continuing operations consists of the following:
 Year Ended December 31,
 202420232022
(In thousands)
Current:
Federal$42,422 $15,877 $7,127 
State(532)3,824 883 
Total current tax expense41,890 19,701 8,010 
Deferred:
Federal203,752 264,154 (46,767)
State18,169 31,394 (8,127)
Total deferred tax expense (benefit)221,921 295,548 (54,894)
Total income tax expense (benefit)$263,811 $315,249 $(46,884)
The reconciliation of income taxes from continuing operations calculated at the U.S. federal tax statutory rate to the Company’s effective tax rate is set forth below: 
 Year Ended December 31,
 202420232022
 (%)(In thousands)(%)(In thousands)(%)(In thousands)
U.S. federal tax statutory rate21.0 %$233,612 21.0 %$281,196 21.0 %$291,068 
State income taxes, net of federal income tax benefit2.5 %27,779 2.6 %35,219 2.6 %36,156 
Change in valuation allowance0.1 %1,118 — %— (27.2)%(377,233)
Other0.1 %1,302 (0.1)%(1,166)0.2 %3,125 
Annual effective tax expense (benefit)23.7 %$263,811 23.5 %$315,249 (3.4)%$(46,884)
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows:
 December 31,
 20242023
 (In thousands)
Deferred tax assets
Net operating loss carryforward$292,978 $318,145 
Bonus and equity-based compensation1,693 14,324 
Other deferred tax assets19,593 17,469 
Total deferred tax assets314,264 349,938 
Less: Valuation allowance(10,384)(9,266)
Total deferred tax assets, net$303,880 $340,672 
Deferred tax liabilities
Oil and natural gas properties$1,521,016 $367,046 
Investment in partnerships60,093 54,452 
Tax on unremitted earnings194,469 — 
Other deferred tax liabilities24,744 14,496 
Total deferred tax liabilities$1,800,322 $435,994 
Total deferred tax liabilities, net$(1,496,442)$(95,322)
The Company’s effective tax rate for the year ended December 31, 2024 was 23.7% of pre-tax income from continuing operations, as compared to an effective tax rate of 23.5% of pre-tax income from continuing operations for the year ended December 31, 2023. The effective tax rates from continuing operations for the years ended December 31, 2024 and December 31, 2023 were higher than the statutory federal rate of 21% primarily as a result of the impact of state income taxes.
As of December 31, 2024, the Company had gross U.S. federal net operating loss (“NOL”) carryforwards of $929.9 million, of which approximately $838.7 million will not expire and $91.2 million will expire from 2032 to 2037. In addition, the Company had gross state NOL carryforwards of $2.2 billion as of December 31, 2024, which expire between 2024 and 2042. The Company and Whiting both experienced an “ownership change” as defined by the Internal Revenue Code of 1986, as amended (the “Code”), in the past, including as a result of the Merger. Accordingly, under Section 382 of the Code, the Company’s NOL carryforwards and other tax attributes (collectively, “Tax Benefits”) are subject to various limitations going forward. However, the limitations applicable under Section 382 of the Code resulting from the Merger are not expected to have a material impact on the realizability of the Company’s deferred tax assets.
Tax Benefits are recorded as an asset to the extent that management assesses the utilization of such Tax Benefits to be more likely than not, and when the future utilization of some portion of the Tax Benefits is determined not to be more likely than not, then a valuation allowance is provided to reduce the Tax Benefits from such assets.
The Company’s estimated valuation allowance as of December 31, 2024 was $10.4 million which relates to state NOL carryforwards, and is approximately consistent with the valuation allowance as of December 31, 2023.
On May 31, 2024, the Company completed the Arrangement, and as a result recognized a net deferred tax liability of $1.2 billion in its purchase price allocation as of the acquisition date primarily to reflect the difference between the tax basis and the fair value of Enerplus’ assets acquired and liabilities assumed. The Company did not record a Canadian deferred tax asset due to the lack of continued operations in Canada going forward.
Unrecognized Tax Benefits. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based not only on the technical merits of the tax position based on tax law, but also the past administrative practices and precedents of the taxing authority. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. As part of the Arrangement, an uncertain tax position was recorded for $15.5 million, which is included in deferred tax liabilities on the Company’s Consolidated Balance Sheet as of December 31, 2024, all of which would affect the effective tax rate if recognized.
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 U.S. federal income tax returns, Canadian federal tax returns and income tax returns in the various states and provinces where it operates.
As the Company has NOL carryforwards from previous tax years, which are utilized in open years, the Internal Revenue Service may examine the Company’s loss years back to the 2010 tax year. The Canadian federal tax returns are open from 2019 and forward.