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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Note 4 – Income Taxes The provision for income taxes consists of the following:
|  | For the Years Ended December 31,
|  | 2016 |  | 2015 |  | 2014
|  | (in thousands)
Current portion of income tax expense |  |  |  |  |  |
Federal |  | $ | 2,932 |  |  | $ | — |  |  | $ | — |
State |  | 1,539 |  |  | 1,571 |  |  | 868 |
Deferred portion of income tax expense (benefit) |  | (448,643 | ) |  | (276,722 | ) |  | 397,780 |
Total income tax expense (benefit) |  | $ | (444,172 | ) |  | $ | (275,151 | ) |  | $ | 398,648 |
Effective tax rate |  | 37.0 | % |  | 38.1 | % |  | 37.4 | %
The components of the net deferred income tax liabilities are as follows:
|  | As of December 31,
|  | 2016 |  | 2015
|  | (in thousands)
Deferred tax liabilities: |  |  |  |
Oil and gas properties |  | $ | 518,394 |  |  | $ | 854,029 |
Derivative asset |  | — |  |  | 179,543 |
Other |  | 7,733 |  |  | 1,233 |
Total deferred tax liabilities |  | 526,127 |  |  | 1,034,805 |
Deferred tax assets: |  |  |  |  |  |
Federal and state tax net operating loss carryovers |  | 151,343 |  |  | 244,942 |
Derivative liability |  | 31,349 |  |  | — |
Stock compensation |  | 10,083 |  |  | 14,529 |
Credit carryover |  | 12,448 |  |  | 6,952 |
Other liabilities |  | 10,567 |  |  | 20,497 |
Total deferred tax assets |  | 215,790 |  |  | 286,920 |
Valuation allowance |  | (5,335 | ) |  | (10,394 | )
Net deferred tax assets |  | 210,455 |  |  | 276,526 |
Total net deferred tax liabilities |  | $ | 315,672 |  |  | $ | 758,279 |
Current federal income tax refundable |  | $ | 644 |  |  | $ | 5,378 |
Current state income tax refundable |  | $ | — |  |  | $ | 65 |
Current state income tax payable |  | $ | 1,181 |  |  | $ | — |
At December 31, 2016, the Company estimated its federal net operating loss (“NOL”) carryforward at $540.2 million, which includes unrecognized excess income tax benefits associated with stock awards of $126.7 million. The Company also has federal R&D credit carryforwards of $7.2 million. The federal NOL carryforward begins to expire in 2031 and the federal R&D credit carryforwards expire between 2028 and 2033. The Company’s alternative minimum tax (“AMT”) credit carryforward of $5.6 million does not expire. State NOL carryforwards were $184.6 million and state tax credits were $528,000 as of December 31, 2016. State NOLs and credits expire between 2017 and 2037. The Company’s current valuation allowance relates to state NOL carryforwards and state tax credits, which the Company anticipates will expire before they can be utilized. The change in the valuation allowance from 2015 to 2016 primarily relates to anticipated utilization of accumulated charitable contributions and an allocable change to the Company’s mix of state apportioned losses and the anticipated utilization of state cumulative NOLs. Federal income tax expense differs from the amount that would be provided by applying the statutory United States federal income tax rate to income before income taxes primarily due to the effect of state income taxes, changes in valuation allowances, R&D credits, and accumulated impacts of other smaller permanent differences, reported as follows:
| For the Years Ended December 31,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Federal statutory tax expense (benefit) | $ | (420,671 | ) |  | $ | (253,001 | ) |  | $ | 372,644 |
Increase (decrease) in tax resulting from: |  |  |  |  |
State tax expense (benefit) (net of federal benefit) | (17,549 | ) |  | (21,583 | ) |  | 21,350 |
Change in valuation allowance | (5,059 | ) |  | 3,148 |  |  | 2,245 |
Research and development credit | — |  |  | (1,971 | ) |  | — |
Other | (893 | ) |  | (1,744 | ) |  | 2,409 |
Income tax expense (benefit) | $ | (444,172 | ) |  | $ | (275,151 | ) |  | $ | 398,648 |
Acquisitions, divestitures, drilling activity, and basis differentials impacting the prices received for oil, gas, and NGLs impact the apportionment of taxable income to the states where the Company owns oil and gas properties. As these factors change, the Company’s state income tax rate changes. This change, when applied to the Company’s total temporary differences, impacts the total state income tax expense (benefit) reported in the current year. Items affecting state apportionment factors are evaluated upon completion of the prior year income tax return, and after significant acquisitions, divestitures, or changes in drilling activity or estimated state revenue occurs during the year. In 2016, most of this activity occurred in the fourth quarter. The Company and its subsidiaries file federal income tax returns and various state income tax returns. With an exception for activity related to its 2003 tax year, the Company is no longer subject to United States federal or state income tax examinations by these tax authorities for years before 2013. The Company recorded an additional $2.0 million net R&D credit in 2015 as a result of its R&D credit settlement with the IRS Appeals Office. During 2016, the Company’s 2007 - 2011 IRS examination was finalized, as was the 2013 IRS audit of the SM-Mitsui Tax Partnership with no material adjustments to previously recorded amounts. The Company complies with authoritative accounting guidance regarding uncertain tax provisions. The entire amount of unrecognized tax benefit reported by the Company would affect its effective tax rate if recognized. Interest expense in the accompanying statements of operations includes a negligible amount associated with income taxes. The Company does not expect a significant change to the recorded unrecognized tax benefits in 2017. The total amount recorded for unrecognized tax benefits is presented below:
| For the Years Ended December 31,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Beginning balance | $ | 2,782 |  |  | $ | 1,582 |  |  | $ | 2,358 |
Additions for tax positions of prior years | 9 |  |  | 1,200 |  |  | 140 |
Settlements | (2,345 | ) |  | — |  |  | (916 | )
Ending balance | $ | 446 |  |  | $ | 2,782 |  |  | $ | 1,582 |

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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