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Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Taxes  
Income Taxes

Note 6. Income Taxes

The Company files a consolidated federal income tax return in the United States and various combined and separate filings in several state and local jurisdictions.

There were no unrecognized tax benefits, nor any accrued interest or penalties associated with unrecognized tax benefits during the years ended June 30, 2024 and 2023. The Company believes that it has appropriate support for the income tax positions taken and to be taken on the Company’s tax returns and that the accruals for tax liabilities are adequate for all open years based on its assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The Company’s federal and state income tax returns are open to audit under the statute of limitations for the fiscal years ended June 30, 2020 through June 30, 2023 for federal tax purposes and for the fiscal years ended June 30, 2019 through June 30, 2023 for state tax purposes. To the extent the Company utilizes net operating losses (“NOLs”) generated in earlier years, such earlier years may also be subject to audit.

Income tax (expense) benefit for the years ended June 30, 2024 and 2023 is comprised of the following (in thousands):

​

​

​

​

​

​

​

​

​

    

June 30, 2024

    

June 30, 2023

Current:

​

​

 

​

​

 

Federal

​

$

(898)

​

$

(9,600)

State

​

​

(620)

​

​

(768)

Total current income tax (expense) benefit

​

​

(1,518)

​

​

(10,368)

Deferred:

​

​

 

​

​

 

Federal

​

​

59

​

​

457

State

​

​

42

​

​

(161)

Total deferred income tax (expense) benefit

​

​

101

​

​

296

Total income tax (expense) benefit

​

$

(1,417)

​

$

(10,072)

​

For the year ended June 30, 2024 the Company recognized income tax expense of $1.4 million and had an effective tax rate of 25.8% compared to income tax expense of $10.1 million and an effective tax rates of 22.2% for the year ended June 30, 2023. During the years ended June 30, 2024 and 2023, the Company recognized an income tax benefit of less than $0.1 million and $0.1 million, respectively, related to the vesting of restricted stock awards.

The Company’s effective tax rate will typically differ from the statutory federal rate as a result of state income taxes, primarily in the states of Louisiana, North Dakota, and Texas, due to percentage depletion in excess of basis, and other permanent differences. The following table presents the reconciliation of the Company’s income taxes calculated at the statutory federal tax rate to the income tax (expense) benefit (in thousands).

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

% of Income

​

​

​

​

% of Income

​

​

​

​

​

​

Before

​

​

​

​

Before

​

​

    

June 30, 2024

    

Income Taxes

    

June 30, 2023

    

Income Taxes

​

Income tax (expense) benefit computed at the statutory federal rate:

​

$

(1,154)

​

​

21.0

%

$

(9,511)

​

21.0

%

Reconciling items:

​

​

 

​

​

​

​

​

 

​

​

​

Return to provision adjustments

​

​

3

​

​

(0.1)

%

​

—

​

—

%

Depletion in excess of tax basis

​

​

114

​

​

(2.1)

%

​

78

​

(0.2)

%

State income taxes, net of federal tax benefit

​

​

(458)

​

​

8.4

%

​

(734)

​

1.6

%

Permanent differences related to stock-based compensation and other

​

​

80

​

​

(1.5)

%

​

96

​

(0.2)

%

Other

​

​

(2)

​

​

0.1

%

​

(1)

​

—

%

Income tax (expense) benefit

​

$

(1,417)

​

​

25.8

%

$

(10,072)

​

22.2

%

​

Deferred income taxes primarily represent the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of net deferred income tax assets (liabilities) recognized are as follows (in thousands):

​

​

​

​

​

​

​

​

​

    

June 30, 2024

    

June 30, 2023

Deferred tax assets:

​

​

 

​

​

 

Non-qualified stock-based compensation

​

$

381

​

$

250

Net operating loss carry-forwards and other carry-forwards

​

​

313

​

​

—

Derivative losses

​

​

192

​

​

—

Asset retirement obligations

​

​

4,427

​

​

3,883

Other deferred tax assets

​

​

197

​

​

201

Total deferred tax assets

​

​

5,510

​

​

4,334

Deferred tax liabilities:

​

​

 

​

​

 

Oil and natural gas properties

​

​

(12,072)

​

​

(11,137)

Total deferred tax liabilities

​

​

(12,072)

​

​

(11,137)

Valuation allowance

​

​

(140)

​

​

—

Net deferred tax liabilities

​

$

(6,702)

​

$

(6,803)

​

Evolution Petroleum OK, Inc., a wholly-owned subsidiary of the Company, has a prior year carryforward of NOLs of $8.9 million generated during tax years 2011 through 2017. With the current year acquisition of assets in Oklahoma by Evolution Petroleum OK, Inc., a deferred tax asset was recorded for a portion of this NOL carryforward.