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Income taxes
 9 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
The following table presents income tax benefit (expense) for the periods presented:
Three months ended September 30,Nine months ended September 30,
(in thousands)2025202420252024
Current$(800)$(469)$(2,632)$(2,706)
Deferred2,575 (59,855)(233,714)(52,278)
Income tax benefit (expense)$1,775 $(60,324)$(236,346)$(54,984)
On July 4, 2025, the One Big Beautiful Bill Act (the "OBBB Act") was signed into law. The OBBB Act is a significant piece of tax legislation that includes provisions which permanently restore an EBITDA-based section 163(j) calculation for tax years beginning after December 31, 2024; restore 100% bonus depreciation under section 168(k) for certain property acquired and placed in service after January 19, 2025; and allow for current expensing of R&D expenditures. ASC 740-10 requires the impact of changes to tax law to be recorded in the period of enactment, which is reflected in these financial statements.
The Company estimates its annual effective tax rate (“AETR”) in recording its quarterly income tax provision for the various jurisdictions in which it operates. The tax effects of statutory rate changes, significant unusual or infrequently occurring items, and certain changes in the assessment of the realizability of deferred tax assets are excluded from the determination of its estimated AETR and are recognized as discrete items in the quarter in which they occur. The Company's AETR as of September 30, 2025 was 0%, which reflects the impact of providing a valuation allowance on the 2025 activity of the Company's federal net deferred tax asset. The Company's effective tax rate for the three months ended September 30, 2025 was 0.5%. During the second quarter of 2025, the Company recorded a discrete charge of $237.9 million related to the valuation allowance recorded on the December 31, 2024 federal net deferred tax asset. As such, the Company's effective tax rate for the nine months ended September 30, 2025 is not meaningful. The effective tax rate for the three and nine months ended September 30, 2024 was 21.89% and 22.83%, respectively. Current income tax expense is primarily attributable to Texas Franchise tax.
Management is required to assess the realizability of deferred tax assets for each reporting period. This assessment involves evaluating all available evidence, both positive and negative, to determine whether it is more-likely-than-not that the deferred tax assets will be realized. One of the most significant pieces of objective evidence is the existence of a cumulative pre-tax income or loss over the past three years. A three-year cumulative loss significantly constrains a company's ability to rely on projected future taxable income as a source of support for the realizability of deferred tax assets.
As a result of full cost ceiling impairments recorded during 2025, and the expectation of potential additional impairments in future periods, the Company is in a three-year pre-tax loss position and anticipates continuing to be in a cumulative three-year pre-tax loss position at year end. This represents a significant negative indicator under applicable accounting guidance
and therefore management can no longer determine that it is more-likely-than-not that the Company's deferred tax assets will be realized. Accordingly, as of June 30, 2025, the Company recorded and continues to maintain a valuation allowance against its federal net deferred tax asset. As of September 30, 2025, the Company maintains a full valuation allowance against its Oklahoma deferred tax assets but has not recorded a valuation allowance on its $6.0 million Texas net deferred tax asset.
As of September 30, 2025, the Company had federal net operating loss carryforwards totaling $922.1 million, of which $477.7 million will begin to expire in 2035 and $444.4 million will not expire but may be limited in future periods, and Oklahoma net operating loss carryforwards that do not expire totaling $297.1 million.
If the Company were to experience an "ownership change," as determined under Section 382 of the Internal Revenue Code, the Company's ability to offset taxable income arising after the ownership change with net operating loss carryforwards, interest expense carryforwards and certain other tax attributes arising prior to the ownership change could be significantly limited. Based on information available as of September 30, 2025, no such ownership change has occurred; however, the pending merger with Crescent is expected to result in an ownership change, which may significantly limit the future utilization of the Company's net operating loss carryforwards, interest expense carryforwards and other tax attributes. Moreover, as discussed above, as of September 30, 2025 these deferred tax assets are fully offset with a valuation allowance.