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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The Company’s income tax (benefit) provision consisted of the following components for the years ended December 31, 2014, 2013 and 2012 (in thousands):
| Year Ended December 31,
| 2014 |  | 2013 |  | 2012
Current |  |  |  |  |
Federal | $ | (1,160 | ) |  | $ | 3,842 |  |  | $ | (72 | )
State | (1,133 | ) |  | 1,842 |  |  | (2 | )
| (2,293 | ) |  | 5,684 |  |  | (74 | )
Deferred |  |  |  |  |
Federal | — |  |  | — |  |  | (97,410 | )
State | — |  |  | — |  |  | (2,878 | )
| — |  |  | — |  |  | (100,288 | )
Total (benefit) provision | (2,293 | ) |  | 5,684 |  |  | (100,362 | )
Less: income tax provision attributable to noncontrolling interest | 283 |  |  | 308 |  |  | 304 |
Total (benefit) provision attributable to SandRidge Energy, Inc. | $ | (2,576 | ) |  | $ | 5,376 |  |  | $ | (100,666 | )
A reconciliation of the (benefit) provision 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, 2014, 2013 and 2012 (in thousands):
| 2014 |  | 2013 |  | 2012
Computed at federal statutory rate | $ | 122,362 |  |  | $ | (178,078 | ) |  | $ | 51,173 |
State taxes, net of federal benefit | 4,145 |  |  | (886 | ) |  | 8,913 |
Non-deductible expenses | 1,895 |  |  | 2,589 |  |  | 7,247 |
Stock-based compensation | 1,467 |  |  | 7,611 |  |  | 7,172 |
Net effects of consolidating the non-controlling interests’ tax provisions | (34,614 | ) |  | (13,901 | ) |  | (37,047 | )
Bargain purchase gain | — |  |  | — |  |  | (42,944 | )
Impairment of non-deductible goodwill | — |  |  | — |  |  | 71,885 |
Change in valuation allowance | (96,769 | ) |  | 188,599 |  |  | (66,429 | )
Valuation allowance release | — |  |  | — |  |  | (100,288 | )
Other | (1,062 | ) |  | (558 | ) |  | (348 | )
Total (benefit) provision attributable to SandRidge Energy, Inc. | $ | (2,576 | ) |  | $ | 5,376 |  |  | $ | (100,666 | )
Deferred income taxes are provided to reflect the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The Company’s deferred tax assets have been reduced by a valuation allowance due to a determination made that it is more likely than not that some or all of the deferred assets will not be realized based on the weight of all available evidence. As of December 31, 2014, 2013 and 2012 the balance of the valuation allowance was $649.6 million, $753.5 million, and $557.3 million, respectively. During the year ended December 31, 2012, the Company recorded a net deferred tax liability of $100.3 million associated with the Dynamic Acquisition and released a corresponding portion of the previously recorded valuation allowance. The partial release of the valuation allowance in 2012 was based on management’s assessment that it is more likely than not that the Company will realize a benefit from more of its existing deferred tax assets as the Dynamic deferred tax liabilities are available to offset the reversal of the Company’s deferred tax assets. Although the Company had a full valuation allowance against its net deferred tax asset at each year December 31, 2014, 2013 and 2012, the partial release of the valuation allowance resulted in a deferred tax benefit in 2012. The Company continues to closely monitor and weigh all available evidence, including both positive and negative, in making its determination whether to maintain a valuation allowance. As a result of the significant weight placed on the Company’s cumulative negative earnings position, the Company continued to maintain the full valuation allowance against its net deferred tax asset at December 31, 2014. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2014 |  | 2013
Deferred tax liabilities |  |  |
Investments(1) | $ | 272,902 |  |  | $ | 301,447 |
Property, plant and equipment | 364,576 |  |  | 180,140 |
Derivative contracts | 113,735 |  |  | — |
Total deferred tax liabilities | 751,213 |  |  | 481,587 |
Deferred tax assets |  |  |
Derivative contracts | — |  |  | 3,692 |
Allowance for doubtful accounts | 19,086 |  |  | 20,358 |
Net operating loss carryforwards | 1,265,458 |  |  | 973,675 |
Compensation and benefits | 19,867 |  |  | 24,895 |
Alternative minimum tax credits and other carryforwards | 43,840 |  |  | 46,624 |
Asset retirement obligations | 21,946 |  |  | 147,626 |
CO 2 under-delivery shortfall penalty | 27,674 |  |  | 15,012 |
Other | 2,934 |  |  | 3,156 |
Total deferred tax assets | 1,400,805 |  |  | 1,235,038 |
Valuation allowance | (649,592 | ) |  | (753,451 | )
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.
As of December 31, 2014, the Company had approximately $9.3 million of alternative minimum tax credits available that do not expire. In addition, the Company had approximately $3.4 billion of federal net operating loss carryovers that expire during the years 2023 through 2034. Excess tax benefits of approximately $17.7 million associated with the vesting of restricted stock awards are included in the federal net operating loss carryovers, but will not be recognized as a tax benefit recorded to additional paid-in capital until realized. Internal Revenue Code (“IRC”) Section 382 addresses company ownership changes and specifically limits the utilization of certain deductions and other tax attributes on an annual basis following an ownership change. The Company experienced ownership changes within the meaning of IRC Section 382 during 2008 and 2010 that subjected certain of the Company’s tax attributes, including $929.4 million of federal net operating loss carryforwards, to an IRC Section 382 limitation. The limitation could result in a material amount of existing loss carryforwards expiring unused. The limitation did not result in a current federal tax liability at December 31, 2014. At December 31, 2014 and 2013, respectively, the Company had a liability of approximately $0.1 million and $1.4 million for unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
| December 31,
| 2014 |  | 2013
Unrecognized tax benefit at January 1 | $ | 1,382 |  |  | $ | 1,330 |
Changes to unrecognized tax benefits related to the current year | — |  |  | 262 |
Changes to unrecognized tax benefits related to a prior year | (17 | ) |  | (210 | )
Decreases to unrecognized tax benefits for settlements with tax authorities | (1,288 | ) |  | — |
Unrecognized tax benefit at December 31 | $ | 77 |  |  | $ | 1,382 |
Consistent with its policy to record interest and penalties on income taxes as a component of the income tax provision, the Company has included approximately $(0.1) million, $(0.1) million and $0.3 million of accrued gross interest with respect to unrecognized tax benefits in its accompanying consolidated statements of operations during the years ended December 31, 2014, 2013 and 2012, respectively. Included in the $1.4 million liability for unrecognized tax benefits at December 31, 2013 was $0.1 million for interest and penalties relating to uncertain tax positions. The company does not expect a significant change in its gross unrecognized tax benefits balance within the next 12 months. The Company’s only taxing jurisdiction is the United States (federal and state). The Company’s tax years 2011 to present remain open for federal examination. Additionally, tax years 2005 through 2010 remain subject to examination for the purpose of determining the amount of federal net operating loss and other carryforwards. The number of years open for state tax audits varies, depending on the state, but are generally from three to five years.

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- 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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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