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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The income tax provision consists of the following:
| 2020 |  | 2019 |  | 2018
| (In thousands)
Current: |  |  |  |  |
State | $ | — |  |  | $ | — |  |  | $ | (1,530) |
Federal | (273) |  |  | (7) |  |  | 253 |
Deferred: |  |  |  |  |
State | 7,563 |  |  | (7,556) |  |  | 1,530 |
Federal | — |  |  | — |  |  | (322) |
Total income tax expense (benefit) provision | $ | 7,290 |  |  | $ | (7,563) |  |  | $ | (69) |
A reconciliation of the statutory federal income tax amount to the recorded expense follows:
| 2020 |  | 2019 |  | 2018
| (In thousands)
(Loss) income before federal income taxes | $ | (1,617,843) |  |  | $ | (2,009,921) |  |  | $ | 430,491 |
Expected income tax at statutory rate | (339,747) |  |  | (422,083) |  |  | 90,403 |
State income taxes | (14,696) |  |  | (28,316) |  |  | (511) |
Other differences | 10,800 |  |  | 3,372 |  |  | 1,078 |
Change in valuation allowance due to current year activity | 350,933 |  |  | 439,464 |  |  | (91,039) |
Income tax expense (benefit) recorded | $ | 7,290 |  |  | $ | (7,563) |  |  | $ | (69) |
The tax effects of temporary differences and net operating loss carryforwards, which give rise to deferred tax assets and liabilities at December 31, 2020, 2019 and 2018 are estimated as follows:
| 2020 |  | 2019 |  | 2018
| (In thousands)
Deferred tax assets: |  |  |  |  |
Net operating loss carryforward | $ | 392,318 |  |  | $ | 269,851 |  |  | $ | 164,363 |
Oil and gas property basis difference | 463,705 |  |  | 289,850 |  |  | 3,595 |
Investment in pass through entities | 61,078 |  |  | 58,951 |  |  | 8,620 |
Stock-based compensation expense | 1,223 |  |  | 1,440 |  |  | 616 |
Business energy investment tax credit | 370 |  |  | 370 |  |  | 369 |
Charitable contributions carryover | 318 |  |  | 297 |  |  | 269 |
Change in fair value of derivative instruments | 7,656 |  |  | 11,219 |  |  | 2,761 |
Foreign tax credit carryforwards | 523 |  |  | 943 |  |  | 2,009 |
Accrued liabilities | 868 |  |  | 669 |  |  | 834 |
ARO liability | 13,414 |  |  | 12,744 |  |  | 16,923 |
Non-oil and gas property basis difference | — |  |  | — |  |  | 104 |
Lease liability | 72 |  |  | 12,128 |  |  | — |
Reorganization items | 25,714 |  |  | — |  |  | — |
State net operating loss carryover | 22,191 |  |  | 13,258 |  |  | 11,526 |
Interest expense carryforward | — |  |  | 23,818 |  |  | — |
Total deferred tax assets | 989,450 |  |  | 695,538 |  |  | 211,989 |
Valuation allowance for deferred tax assets | (985,528) |  |  | (647,575) |  |  | (211,987) |
Deferred tax assets, net of valuation allowance | 3,922 |  |  | 47,963 |  |  | 2 |
Deferred tax liabilities: |  |  |  |  |
Non-oil and gas property basis difference | 575 |  |  | 1,859 |  |  | — |
Change in fair value of derivative instruments | 3,272 |  |  | 26,410 |  |  | 2 |
Right of use asset | 72 |  |  | 12,128 |  |  | — |
Other | 3 |  |  | 3 |  |  | — |
Total deferred tax liabilities | 3,922 |  |  | 40,400 |  |  | 2 |
Net deferred tax asset | $ | — |  |  | $ | 7,563 |  |  | $ | — |
The company recognized income tax expense of $7.3 million in 2020 and an income tax benefit of $7.6 million in 2019. The net change is primarily related to the recognition of the valuation allowance against the Oklahoma state tax deferred asset that was not realized as a result of the Oklahoma water asset sale as previously expected. The Company has an available federal tax net operating loss carryforward estimated at approximately $1.9 billion as of December 31, 2020. These federal net operating loss carryforwards generated in tax years prior to 2018 will begin to expire in 2023. As a result of the Tax Cuts and Jobs Act, the 2018 through 2020 federal NOL carryforwards have no expiration. The Company also has state net operating loss carryovers of $441.0 million that began to expire in 2019 and federal foreign tax credit carryovers of $0.5 million that will expire in 2021. At each reporting period, the Company weighs all available positive and negative evidence to determine whether its deferred tax assets are more likely than not to be realized. As a result of this analysis at December 31, 2020, the Company determined a valuation allowance was necessary with respect to its net deferred tax assets totaling $985.5 million. There was an increase of $338.0 million, an increase of $439.5 million and a decrease of $86.8 million to the valuation allowance during 2020, 2019 and 2018, respectively. The increase in the valuation allowance in 2020 and 2019 was primarily due to increases in net deferred tax assets from pre-tax losses resulting from impairments in the Company's oil and natural gas properties. The decrease in the valuation allowance in 2018 was primarily due to decreases in net deferred tax assets due to pre-tax income. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The Act includes several significant provisions for corporations including allowing companies to carryback certain NOLs, increasing the amount of NOLs that corporations can use to offset income, and increasing the amount of deductible interest under section 163(j). The Company does not expect to be materially impacted by the CARES Act provision and does not anticipate the CARES Act to have a material effect on its ability to realized deferred tax assets. The Company’s ability to utilize NOL carryforwards and other tax attributes to reduce future federal taxable income is subject to potential limitations under Section 382 and its related tax regulations. The utilization of these attributes may be limited if certain ownership changes by 5% shareholders (as defined in Treasury regulations pursuant to Section 382) and the effects of stock issuances by the Company during any three-year period result in a cumulative change or more than 50% in the beneficial ownership of the Company. As of December 31, 2020, the Company has completed a Section 382 analysis, which reflects that no ownership change has occurred to further limit the use of NOL carryforwards or other tax attributes. There are conditions that exist that are beyond the Company’s control which could cause an ownership change in the future and create a significant limitation on the Company's ability to utilize those tax attributes. On April 30, 2020, the board of directors of the Company adopted a tax benefits preservation plan in order to protect against a possible limitation on the Company’s ability to use its tax net operating losses and certain other tax benefits to reduce potential future U.S. federal income tax obligations. The Tax Benefits Preservation Plan is intended to prevent against such an ownership change by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities. As of December 31, 2020, the Company has recorded a liability associated with uncertain tax positions of $3.8 million, which is included in liabilities subject to compromise in the accompanying consolidated balance sheet as of December 31, 2020.

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- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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