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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12 – Income Taxes The current and deferred income tax provision for the years ended December 31, 2023 and 2022 were comprised of the following:
|  |  | 2023 |  |  |  | 2022 |
Current |  | $ | (132,192 | ) |  | $ | 208,898 |
Deferred |  |  | — |  |  |  | — |
Income tax provision |  | $ | (132,192 | ) |  | $ | 208,898 |
In the event that an entity has an “ownership change” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended ( “IRC”)), an entity’s federal net operating loss carryforwards (“NOLs”) generated prior to an ownership change would be subject to annual limitations, which could defer or eliminate the Company’s ability to utilize these tax losses against future taxable income. Generally, an “ownership change” occurs if one or more stockholders, each of whom owns 5% or more in value of a corporation’s stock, increase their aggregate percentage ownership by more than 50% over the lowest percentage of stock owned by those stockholders at any time during the preceding three-year period. A full Section 382 analysis was prepared in 2023 and it was determined that our NOLs were subject to limitations under IRC Section 382. The Company's ability to use NOLs and other tax attributes to reduce taxable income and income taxes could be materially impacted by a future IRC 382 ownership change. Future transactions involving the Company's stock including those outside of the Company's control could cause an IRC Section 382 ownership change resulting in a limitation on tax attributes currently not limited and a more restrictive limitation on tax attributes currently subject to the previous IRC 382 limitation. At December 31, 2023, the Company had approximately $24.3 million of federal NOLs generated in prior years available to offset against future taxable income, net of NOLs expected to expire unused due to IRC Section 382 limitations. Of the $24.3 million NOLs, approximately $23 million relate to periods after 2017 and have an indefinite life. Additionally, $1.3 million will begin to expire between 2023-2037 if not used. Approximately, $4.7 million of the NOLs were limited as of December 31, 2023 due to previous ownership changes. Deferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax basis of assets and liabilities. The Company’s net tax position as of December 31, 2023 and 2022 is as follows:
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |  |  |
Loss carry-forwards |  | $ | 6,269,503 |  |  | $ | 4,789,586 |
Right of use assets |  |  | — |  |  |  | 7,341 |
Stock option grants |  |  | 2,022,184 |  |  |  | 1,369,105 |
Asset retirement obligation |  |  | 7,433,670 |  |  |  | 6,616,407 |
Other |  |  | 526,873 |  |  |  | 436,477 |
Total deferred tax assets |  |  | 16,252,230 |  |  |  | 13,218,916 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Oil and Gas Properties |  |  | (7,327,620 | ) |  |  | (5,552,159 | )
Other property and equipment |  |  | (123,915 | ) |  |  | (171,650 | )
Derivatives |  |  | (104,956 | ) |  |  | (31,369 | )
Lease liabilities |  |  | (25,133 | ) |  |  | — |
Other |  |  | — |  |  |  | (69,688 | )
Total deferred tax liabilities |  |  | (7,581,624 | ) |  |  | (5,824,866 | )
Net deferred tax asset before valuation allowance |  |  | 8,670,606 |  |  |  | 7,394,050 |
Valuation allowance |  |  | (8,670,606 | ) |  |  | (7,394,050 | )
Net deferred taxes |  | $ | — |  |  | $ | — |
Utilization of the Company’s loss carryforwards is dependent on realizing taxable income. The Company’s recorded valuation allowances of $8.7 million and $7.4 million as of December 31, 2023 and 2022, respectively, are due to the uncertainty related to its ability to utilize some of its deferred income tax assets, primarily consisting of net operating loss carryforwards prior to expiration or the limitation under Section 382 as discussed above. Reconciliations of the tax provision (benefit) computed at the statutory federal rate to the Company’s total income tax benefit for the years ended December 31, 2023 and 2022 are as follows:
|  | 2023 |  |  | 2022 |
|  | $ |  |  | % |  |  | $ |  |  | % |
Provision (benefit) at statutory rate |  |  | (2,646,378 | ) |  |  | 21.0% |  |  |  | 1,531,536 |  |  |  | 21.0% |
State Taxes (net of federal impact) |  |  | (598,191 | ) |  |  | 4.7% |  |  |  | 350,632 |  |  |  | 4.9% |
Nondeductible Expenses |  |  | 31,037 |  |  |  | -0.2% |  |  |  | 21,052 |  |  |  | 0.3% |
Return to Accrual |  |  | (72,448 | ) |  |  | 0.6% |  |  |  | (2,135,704 | ) |  |  | -29.3% |
NOLs Expected to Expire Unused Due to Section 382 Limitation |  |  | 1,877,230 |  |  |  | -14.9% |  |  |  | — |  |  |  | 0.0% |
Valuation Allowance |  |  | 1,276,558 |  |  |  | -10.1% |  |  |  | 441,382 |  |  |  | 6.1% |
Income tax provision (benefit) |  |  | (132,192 | ) |  |  | 1.0% |  |  |  | 208,898 |  |  |  | 2.9% |
The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would more likely than not be sustained by examination. Therefore, at December 31, 2023, the Company has not established any reserves for, nor recorded any unrecognized benefits related to uncertain tax positions. The Company’s only taxing jurisdiction is the United States (federal and state). The Company’s tax years 2020 to present remain open for federal examination. Additionally, tax years 2003 through 2019 remain subject to examination for the purpose of determining the amount of federal NOL and other carryforwards. The number of years open for state tax audits varies, depending on the state, but is 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/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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