XML 32 R11.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
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,
| 2017 |  | 2016 |  | 2015
| (in thousands)
Current portion of income tax expense |  |  |  |  |
Federal | $ | 5,698 |  |  | $ | 2,932 |  |  | $ | — |
State | 3,398 |  |  | 1,539 |  |  | 1,571 |
Deferred portion of income tax benefit | (192,066 | ) |  | (448,643 | ) |  | (276,722 | )
Total income tax benefit | $ | (182,970 | ) |  | $ | (444,172 | ) |  | $ | (275,151 | )
Effective tax rate | 53.2 | % |  | 37.0 | % |  | 38.1 | %
The components of the net deferred tax liabilities are as follows:
| As of December 31,
| 2017 |  | 2016
| (in thousands)
Deferred tax liabilities |  |  |
Oil and gas properties | $ | 142,467 |  |  | $ | 518,394 |
Other | 3,412 |  |  | 7,733 |
Total deferred tax liabilities | 145,879 |  |  | 526,127 |
Deferred tax assets |  |  |  |  |
Derivative liabilities | 29,463 |  |  | 31,349 |
Credit carryover | 22,537 |  |  | 12,448 |
Pension | 7,986 |  |  | 10,366 |
Federal and state tax net operating loss carryovers | 3,867 |  |  | 151,343 |
Stock compensation | 3,545 |  |  | 10,083 |
Other liabilities | 1,470 |  |  | 201 |
Total deferred tax assets | 68,868 |  |  | 215,790 |
Valuation allowance | (2,978 | ) |  | (5,335 | )
Net deferred tax assets | 65,890 |  |  | 210,455 |
Total net deferred tax liabilities | $ | 79,989 |  |  | $ | 315,672 |
Current federal income tax refundable | $ | 37 |  |  | $ | 644 |
Current state income tax payable | $ | 3,009 |  |  | $ | 1,181 |
The enactment of the 2017 Tax Act on December 22, 2017 reduced the Company’s federal tax rate for 2018 and future years from 35 percent to 21 percent. This rate change was required to be applied to the Company’s total temporary differences as of December 31, 2017, resulting in a decrease in net deferred tax liabilities and a realized tax benefit of $63.7 million in the fourth quarter of 2017. This realized tax benefit amount represents 18.5 percentage points of the effective tax rate for 2017 reported above. Please refer to the table below for additional detail. Although the Company believes it has properly analyzed the tax accounting impacts of the 2017 Tax Act and appropriately re-measured its net deferred tax liability as of December 31, 2017, it will continue to monitor provisions with discrete rate impacts, such as the limitation on executive compensation, for subsequent events and guidance within one year of the enacted date. As of December 31, 2017, the Company estimated its federal net operating loss (“NOL”) carryforward at $1.3 million, which reflects the planning strategies to utilize NOLs for the 2017 and 2016 tax years. After the adoption of ASU 2016-09 in 2017, the Company no longer records a deferred tax amount for unrecognized excess income tax benefits associated with employee share-based payment awards. A cumulative effect adjustment was recorded to the beginning deferred income tax balance and retained earnings as of January 1, 2017. Please refer to Note 1 – Summary of Significant Accounting Policies above for additional information regarding the adoption of ASU 2016-09. The Company has federal R&D credit carryforwards of $7.2 million. The federal R&D credit carryforwards expire between 2028 and 2033. The Company’s AMT credit carryforward of $15.7 million does not expire and is expected to be fully refunded by 2022 subject to possible limitations placed on these types of refunds under the sequestration rules enacted by Congress. State NOL carryforwards were $71.8 million and state tax credits were $283,000 as of December 31, 2017. Federal and state NOLs and state credits expire between 2018 and 2038. The Company’s current valuation allowance relates to state NOL carryforwards and state tax credits, which could not be utilized in the respective states for the tax years 2017 and 2016, and are expected to expire before they can be utilized. The change in the valuation allowance from 2016 to 2017 primarily relates to an allocable change to the Company’s mix of state apportioned losses, anticipated utilization of state cumulative NOLs and to a lesser extent the cumulative state effect of adopting ASU 2016-09. Federal income tax benefit differs from the amount that would be provided by applying the U.S. federal statutory 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,
| 2017 |  | 2016 |  | 2015
| (in thousands)
Federal statutory tax benefit | $ | (120,335 | ) |  | $ | (420,671 | ) |  | $ | (253,001 | )
Increase (decrease) in tax resulting from: |  |  |  |  |
Federal tax reform changes - 2017 Tax Act | (63,675 | ) |  | — |  |  | — |
State tax benefit (net of federal benefit) | (3,286 | ) |  | (17,549 | ) |  | (21,583 | )
Change in valuation allowance | (2,727 | ) |  | (5,059 | ) |  | 3,148 |
Employee share-based compensation | 8,190 |  |  | — |  |  | — |
Other | (1,137 | ) |  | (893 | ) |  | (3,715 | )
Income tax benefit | $ | (182,970 | ) |  | $ | (444,172 | ) |  | $ | (275,151 | )
Acquisitions, divestitures, drilling activity, and basis differentials, which impact 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, after significant acquisitions and divestitures, if there are significant changes in drilling activity, or if estimated state revenue changes occur during the year. 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 - 2005 tax years, the Company is generally no longer subject to United States federal or state income tax examinations by tax authorities for years before 2013. The exception tax years have been reopened for net operating loss carryback claims and are currently under examination by the Internal Revenue Service (the “IRS”). During the third quarter of 2017, the Company received a $5.5 million refund in advance of the IRS completing its examination of the Company’s claims. 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 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. 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 2018. The total amount recorded for unrecognized tax benefits is presented below:
| For the Years Ended December 31,
| 2017 |  | 2016 |  | 2015
| (in thousands)
Beginning balance | $ | 446 |  |  | $ | 2,782 |  |  | $ | 1,582 |
Additions for tax positions of prior years | — |  |  | 9 |  |  | 1,200 |
Settlements | — |  |  | (2,345 | ) |  | — |
Ending balance | $ | 446 |  |  | $ | 446 |  |  | $ | 2,782 |

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