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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Note 4 – Income Taxes The provision for income taxes consisted of the following:
| For the Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Current portion of income tax (expense) benefit |  |  |  |  |
Federal | $ | (18,168) |  |  | $ | (8,461) |  |  | $ | (9,230) |
State | (2,776) |  |  | 395 |  |  | (5,531) |
Deferred portion of income tax expense | (174,986) |  |  | (88,256) |  |  | (269,057) |
Income tax expense | $ | (195,930) |  |  | $ | (96,322) |  |  | $ | (283,818) |
Effective tax rate | 20.3 | % |  | 10.5 | % |  | 20.3 | %
The components of the net deferred tax liabilities are as follows:
| As of December 31,
| 2024 |  | 2023
| (in thousands)
Deferred tax liabilities: |  |  |
Oil and gas properties excluding asset retirement obligation liabilities | $ | 596,401 |  |  | $ | 450,634 |
Derivative assets | 8,336 |  |  | 12,319 |
Other | 6,391 |  |  | 6,283 |
Total deferred tax liabilities | 611,128 |  |  | 469,236 |
Deferred tax assets: |  |  |
Asset retirement obligation liabilities | 32,503 |  |  | 26,592 |
Credit carryover, net | 19,079 |  |  | 56,097 |
Lease liabilities | 4,042 |  |  | 4,454 |
Legal liabilities | 3,168 |  |  | 2,838 |
Federal and state tax net operating loss carryovers | 2,837 |  |  | 3,271 |
Equity compensation | 2,387 |  |  | 725 |
Pension | 1,089 |  |  | 2,453 |
Other | 1,607 |  |  | 4,309 |
Total deferred tax assets | 66,712 |  |  | 100,739 |
Valuation allowance | (879) |  |  | (1,406) |
Net deferred tax assets | 65,833 |  |  | 99,333 |
Net deferred tax liabilities | $ | 545,295 |  |  | $ | 369,903 |
Current federal income tax refundable (payable) | $ | 2,362 |  |  | $ | (4,899) |
Current state income tax refundable (payable) | $ | (118) |  |  | $ | 1,253 |
As of December 31, 2024, the Company had gross state net operating loss (“NOL”) carryforwards of $71.3 million. Other than in states with no NOL carryforward expiration, the Company’s state NOL carryforwards expire between 2034 and 2039. The Company’s current valuation allowance includes an amount for state NOL carryforwards and state tax credits, which are expected to expire before they can be utilized. The Company completed a multi-year R&D credit study in 2023, which resulted in a favorable adjustment to the Company’s effective tax rate for the year ended December 31, 2023, and a reduction of the Company’s 2023 tax obligation. After utilizing a portion of the credits for the 2023 and 2024 tax years, the recorded net carryover R&D credit, as of December 31, 2024, expected to be utilized in future periods totaled $18.8 million. The R&D credits expire between 2041 and 2044. Income tax expense or benefit differs from the amount that would be calculated by applying the statutory United States federal income tax rate to income or loss before income taxes. These differences primarily relate to the effect of federal tax credits, state income taxes, changes in valuation allowances, excess tax benefits and deficiencies from stock-based compensation awards, tax deduction limitations on compensation of covered individuals, the cumulative effect of other smaller permanent differences, and can also reflect the cumulative effect of an enacted tax rate change, in the period of enactment, on the Company’s net deferred tax asset and liability balances. These differences for the years ended December 31, 2024, 2023, and 2022, are presented below:
| For the Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Federal statutory tax expense | $ | (202,907) |  |  | $ | (191,983) |  |  | $ | (293,112) |
(Increase) decrease in tax resulting from: |  |  |  |  |
Net federal R&D tax credit | 16,909 |  |  | 92,420 |  |  | — |
Change in valuation allowance | 527 |  |  | 210 |  |  | 16,845 |
State tax (expense) benefit, net of federal effect | (8,977) |  |  | 5,166 |  |  | (9,870) |
Other | (1,482) |  |  | (2,135) |  |  | 2,319 |
Income tax expense | $ | (195,930) |  |  | $ | (96,322) |  |  | $ | (283,818) |
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. Transporting oil from the location where it is produced to the different markets where it may be sold affects the apportionment of income taxes. 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 reported. 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. For all years before 2021, the Company is generally no longer subject to United States federal or state income tax examinations by tax authorities. 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. The Company does not expect a significant change to the recorded unrecognized tax benefits in 2025. The total amount recorded for unrecognized tax benefits is presented below:
| For the Years Ended December 31,
| 2024 |  | 2023 |  | 2022
| (in thousands)
Beginning balance | $ | 24,159 |  |  | $ | 446 |  |  | $ | 446 |
Additions based on tax positions related to current year | 4,654 |  |  | 23,713 |  |  | — |
Ending balance | $ | 28,813 |  |  | $ | 24,159 |  |  | $ | 446 |

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