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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income TaxesThe change in our effective rate from (10.0)% in the year ended December 31, 2021 to (20.4)% for the year ended December 31, 2022 is primarily due to recognition of U.S. federal general business credits in 2022 related to the 2021 tax period and release of the valuation allowance. The credits are available to offset future federal income tax liabilities. The change in our effective rate from 2.8% in the year ended December 31, 2020 to (10.0)% for the year ended December 31, 2021 is primarily due to nondeductible stock compensation, adjustments to our tax credit carryforward balances and changes in the valuation allowance. Income tax expense (benefit) consisted of the following:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (in thousands)
Current taxes: |  |  |  |  |
Federal | $ | 642 |  |  | $ | — |  |  | $ | — |
State | 1,597 |  |  | 581 |  |  | 828 |
Total current taxes | 2,239 |  |  | 581 |  |  | 828 |
Deferred taxes: |  |  |  |  |
Federal | (44,053) |  |  | 832 |  |  | 2,653 |
State | (622) |  |  | — |  |  | (10,699) |
Total deferred taxes | (44,675) |  |  | 832 |  |  | (8,046) |
Total current and deferred taxes | $ | (42,436) |  |  | $ | 1,413 |  |  | $ | (7,218) |
A reconciliation of the federal statutory tax rate to the effective tax rate is as follows:
| Year Ended December 31, |
| 2022 |  | 2021 |  | 2020 |
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | % |
State, net of federal tax benefit | 6.2 | % |  | 3.7 | % |  | 6.3 | % |
Nondeductible compensation | 1.8 | % |  | (24.5) | % |  | — | % |
Effect of permanent differences | (0.3) | % |  | (4.7) | % |  | (0.6) | % |
Tax credits - Prior Year | (11.5) | % |  | (29.5) | % |  | 4.9 | % |
Tax credits - Current Year | — | % |  | 21.5 | % |  | 1.1 | % |
State return to provision | (0.3) | % |  | (0.2) | % |  | (1.1) | % |
Change in valuation allowance | (37.3) | % |  | 2.7 | % |  | (28.8) | % |
Effective tax rate | (20.4) | % |  | (10.0) | % |  | 2.8 | % |
Significant components of the deferred tax assets and liabilities are as follows:
| Year Ended December 31,
| 2022 |  | 2021
| (in thousands)
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 22,402 |  |  | $ | 40,846 |
Accruals | 10,728 |  |  | 11,731 |
Asset retirement obligations | 48,994 |  |  | 44,437 |
Derivative instruments | 2,280 |  |  | 12,776 |
Tax credits | 88,908 |  |  | 61,044 |
Other | 2,882 |  |  | 3,551 |
Subtotal | 176,194 |  |  | 174,385 |
Valuation allowance | — |  |  | (77,546) |
Total deferred tax assets | 176,194 |  |  | 96,839 |
Deferred tax liabilities: |  |  |
Book tax differences in property basis | (133,350) |  |  | (98,670) |
Total deferred tax liabilities | (133,350) |  |  | (98,670) |
Net deferred tax asset (liability) | $ | 42,844 |  |  | $ | (1,831) |
As of December 31, 2022, the Company had approximately $107 million of federal net operating loss (“NOL”) carryforwards and no state net operating loss carryforwards. The federal net operating loss carryovers have no expiration date. In addition, as of December 31, 2022, the Company had US federal general business tax credit carryforwards totaling $82 million and state tax credits of $8 million ($7 million net of federal benefit), which, if unused, will expire after taxable years ended 2037 and 2033, respectively. In recording deferred income tax assets, we consider whether it is more likely than not that some portion or all of the deferred income tax assets will be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income of the appropriate character during the periods in which those deferred income tax assets would be deductible. We consider the scheduled reversal of deferred income tax liabilities and projected future income for this determination. As of December 31, 2022, due to the positive evidence of current year income, fair value of proved reserves and related future income projections, commodity price forecasts based on published market quotes, and the reversal of existing federal and state temporary differences, and based on the preponderance of that evidence, we determined there is sufficient positive evidence to conclude that is is more likely than not that our deferred tax assets are realizable. Therefore, we have fully released the valuation allowance in 2022, resulting in an income tax benefit of $78 million. We previously recorded a valuation allowance on our deferred tax assets for the year ended December 31, 2021 in the amount of $78 million. We had no material uncertain tax positions at December 31, 2022 or 2021. We do not believe that the total unrecognized benefits will significantly increase within the next 12 months. We are subject to taxation in the United States and various state jurisdictions. We are not currently under audit by any federal or state income tax authority. The 2019 through 2022 federal and 2018 through 2022 state tax years generally remain open to examination under the respective statute of limitations.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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