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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

(Benefit) Provision for Income Taxes

The Company’s income tax provision (benefit) consisted of the following components for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Year Ended December 31,
	2013				2012				2011
Current
Federal	$	3,842			$	(72	)		$	618
State	1,842				(2		)		551
	5,684				(74		)		1,169
Deferred
Federal	—				(97,410		)		(6,447		)
State	—				(2,878		)		(539		)
	—				(100,288		)		(6,986		)
Total provision (benefit)	5,684				(100,362		)		(5,817		)
Less: income tax provision attributable to noncontrolling interest	308				304				109
Total provision (benefit) attributable to SandRidge Energy, Inc.	$	5,376			$	(100,666	)		$	(5,926	)

Reconciliation of Provision (Benefit) for Income Taxes at Statutory Federal Tax Rate

A reconciliation of the provision (benefit) for income taxes at the statutory federal tax rate to the Company’s actual income tax benefit is as follows for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	2013				2012				2011
Computed at federal statutory rate	$	(178,078	)		$	51,173			$	54,800
State taxes, net of federal benefit	(886		)		8,913				5,231
Non-deductible expenses	2,589				7,247				6,394
Stock-based compensation	7,611				7,172				8,229
Net effects of consolidating the non-controlling interests’ tax provisions	(13,901		)		(37,047		)		(19,120		)
Bargain purchase gain	—				(42,944		)		—
Impairment of non-deductible goodwill	—				71,885				—
Change in valuation allowance	188,599				(66,429		)		(51,631		)
Valuation allowance release	—				(100,288		)		(5,290		)
Other	(558		)		(348		)		(4,539		)
Total provision (benefit) attributable to SandRidge Energy, Inc.	$	5,376			$	(100,666	)		$	(5,926	)

Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2013				2012
Deferred tax liabilities
Investments(1)	$	301,447			$	334,331
Property, plant and equipment	180,140				198,424
Derivative contracts	—				24,819
Total deferred tax liabilities	481,587				557,574
Deferred tax assets
Derivative contracts	3,692				—
Allowance for doubtful accounts	20,358				17,713
Net operating loss carryforwards	973,675				859,328
Litigation settlement	355				7,200
Compensation and benefits	24,895				13,935
Alternative minimum tax credits and other carryforwards	46,624				42,242
Asset retirement obligations	147,626				172,229
Under-delivery obligation	15,012				—
Other	2,801				2,193
Total deferred tax assets	1,235,038				1,114,840
Valuation allowance	(753,451		)		(557,266		)
Net deferred tax liability	$	—			$	—

____________________

(1) Includes the Company’s deferred tax liability resulting from its investment in the Royalty Trusts. See Note 4 for further discussion of the Royalty Trusts.

Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	December 31,
	2013				2012
Unrecognized tax benefit at January 1	$	1,330			$	1,758
Changes to unrecognized tax benefits related to the current year	262				—
Changes to unrecognized tax benefits related to a prior year	(210		)		(428		)
Unrecognized tax benefit at December 31	$	1,382			$	1,330

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the change in unrecognized tax benefits.

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