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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Deferred tax assets and liabilities are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years related to cumulative temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying consolidated balance sheets. The tax effect of the net change in the cumulative temporary differences during each period in the deferred tax assets and liabilities determines the periodic provision for deferred taxes.
The provision for income taxes consists of the following (in thousands):
Year Ended December 31,
202420232022
Current tax expense (benefit)
Federal$4,669 $(25,537)$51,246 
State3,530 (4,460)16,950 
Total current tax expense (benefit)8,199 (29,997)68,196 
Deferred tax expense
Federal223,636 238,426 289,578 
State12,137 6,737 47,924 
Total deferred tax expense
235,773 245,163 337,502 
Total income tax expense
$243,972 $215,166 $405,698 
Temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities that give rise to the net deferred tax liability and asset result from the following components (in thousands):
As of December 31,
20242023
Deferred tax liabilities:
Oil and gas properties$1,484,161 $1,200,521 
Right-of-use assets25,553 22,654 
Commodity derivative contracts6,429 — 
Total deferred tax liabilities1,516,143 1,223,175 
Deferred tax assets:
Federal and state tax net operating loss carryforward468,813 504,922 
Interest expense carryforward
97,234 33,564 
Asset retirement obligations107,380 79,718 
Commodity derivative contracts— 7,251 
Inventory211 213 
Stock-based compensation10,079 7,327 
Lease liability25,803 22,866 
Transaction costs6,450 6,078 
Other long-term assets25,023 21,859 
Total deferred tax assets740,993 683,798 
Less: Valuation allowance25,404 25,404 
Total deferred tax assets after valuation allowance715,589 658,394 
Deferred income tax liabilities, net
$(800,554)$(564,781)
We had $1.9 billion and $2.1 billion of net operating loss carryovers for federal income tax purposes as of December 31, 2024 and 2023, respectively. Due to change of ownership provisions of Section 382 of the Internal Revenue Code, utilization of net operating loss carryovers and other tax attributes are limited. Federal net operating loss carryforwards incurred prior to January 1, 2018 of $369.2 million will begin to expire in 2037. Federal net operating loss carryforwards incurred after December 31, 2017 of $1.6 billion have no expiration and can only be used to offset 80% of taxable income when utilized.
We assess the recoverability of our deferred tax assets each period by considering whether it is more-likely than not that all or a portion of the deferred tax assets will be realized. In making such a determination, we consider all available evidence (both positive and negative), including future reversals of temporary differences, tax-planning strategies, projected future taxable income, and results of operations. As a result of merger activity in 2021, we recorded a valuation allowance of $25.4 million, which continued to be recorded as of December 31, 2024 and 2023, against certain acquired net operating losses and other tax attributes due to the limitation on realizability caused by the change of ownership provisions of Section 382 of the Internal Revenue Code. We will continue to monitor facts and circumstances in the reassessment of the likelihood that the deferred tax assets will be realized.
Recorded income tax expense or benefit differs from the amount that would be provided by applying the statutory United States federal income tax rate of 21% to income before income taxes due to state income taxes and other changes outlined as follows (in thousands):
Year Ended December 31,
202420232022
Federal statutory tax expense$227,366 $210,458 $347,293 
Increase (decrease) in tax resulting from:
State tax expense, net of federal benefit28,894 26,081 58,658 
State tax rate change (13,202)(23,002)— 
Return to provision(1,314)(1,866)19,975 
Compensation of covered individuals4,851 5,689 6,138 
Stock-based compensation(1,309)(2,996)(3,343)
Bargain purchase gain— — (2,852)
Tax credits(1,784)— (1,405)
Change in valuation allowance— — (19,302)
Other470 802 536 
Total income tax expense
$243,972 $215,166 $405,698 
The Vencer Acquisition, divestitures, drilling activity, and the prices received for crude oil, natural gas, and NGL, impact the apportionment of taxable income to the states where we own crude oil and natural gas properties. As these factors change, our state income tax rate changes. This change, when applied to our total temporary differences, impacts the total state income tax (expense) benefit reported in the current year.
We had no unrecognized tax benefits as of December 31, 2024, 2023, and 2022. As of December 31, 2024, the Company is subject to U.S. federal and state income tax examination for the years ended December 31, 2023, 2022, and 2021. Tax returns for years prior to 2021 may remain open with respect to net operating loss carryforwards that are utilized in a later year, as tax attributes from prior years can be adjusted during an audit of a later year.
In 2022, the Inflation Reduction Act was signed into law. Among other provisions, the Inflation Reduction Act imposes a 15% corporate alternative minimum tax (“CAMT”) for tax years beginning after December 31, 2022, imposes a 1% excise tax on corporate stock repurchases after December 31, 2022, and provides tax incentives to promote various energy efficient initiatives. Based on the application of currently available guidance, the Company’s income tax expense for the year ended December 31, 2024 was not impacted by the CAMT