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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 12. INCOME TAXES The components of the income tax provision for the years ended December 31, 2020 and 2019 include the following:
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Current income tax expense (benefit) |  | $ | (42 | ) |  | $ | - |
Deferred income taxes |  |  | - |  |  |  | - |
|  | $ | (42 | ) |  | $ | - |
The current income tax benefit for the year ended December 31, 2020 represents a refund of alternative minimum tax credit carryovers received in 2020. The Company incurred net losses for each of the years ended December 31, 2020 and 2019, and the Company has recorded valuation allowances for its net deferred tax assets for each of those years. Accordingly, the Company has not recognized a benefit for income taxes in the accompanying financial statements. Income tax benefit using the Company’s effective income tax rate differs from the U.S. federal statutory income tax rate due to the following:
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Income tax benefit at federal statutory rate |  | $ | (1,361 | ) |  | $ | (115 | )
State income tax benefit, net of federal impact |  |  | (35 | ) |  |  | (32 | )
Change in state tax rate, net of federal benefit |  |  | (32 | ) |  |  | 331 |
Change in value of warrant |  |  | 5 |  |  |  | (74 | )
Percentage depletion carryover |  |  | (3 | ) |  |  | 9 |
Prior year true up |  |  | 154 |  |  |  | 52 |
Other |  |  | (53 | ) |  |  | 23 |
Increase (decrease)in valuation allowance |  |  | 1,283 |  |  |  | (194 | )
Income tax expense (benefit) |  | $ | (42 | ) |  | $ | - |
The components of deferred tax assets and liabilities as of December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryover (1) |  | $ | 5,154 |  |  | $ | 4,098 |
Property and equipment |  |  | 3,939 |  |  |  | 3,468 |
Percentage depletion and contribution carryovers (1) |  |  | 1,855 |  |  |  | 1,833 |
Alternative minimum tax credit carryover (1) |  |  | - |  |  |  | 42 |
Equity method investment and other |  |  | 246 |  |  |  | 615 |
Deferred compensation liability |  |  | 7 |  |  |  | 41 |
Asset retirement obligations |  |  | 315 |  |  |  | 181 |
Stock-based compensation |  |  | 115 |  |  |  | 68 |
Lease obligations |  |  | 32 |  |  |  | 44 |
Total deferred tax assets |  |  | 11,663 |  |  |  | 10,390 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Lease assets |  |  | (28 | ) |  |  | (40 | )
Total deferred tax liabilities |  |  | (28 | ) |  |  | (40 | )
Net deferred tax assets |  |  | 11,635 |  |  |  | 10,350 |
Less valuation allowance |  |  | (11,635 | ) |  |  | (10,350 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |
| (1) | In December 2017, the Company paid down debt through the issuance of common stock. This issuance represented a 49.3% ownership change in the Company. This change in ownership, combined with other equity events, triggered loss limitations under Internal Revenue Code (“I.R.C.”) Section 382. As a result, the Company wrote-off $29.8 million of gross deferred tax assets in 2017, and an additional $2.4 million in gross deferred tax assets in 2018. Since the Company has maintained a valuation allowance against these tax assets there is no impact to the consolidated statement of operations in either year.
As of December 31, 2020, the Company has approximately $8.9 million in net operating loss carryovers (after limitations) for federal income tax purposes. The net operating losses are not subject to limitation under I.R.C. Section 382 and carry forward indefinitely. I.R.C. Section 382 of the Internal Revenue Code limits the Company’s ability to utilize the tax deductions associated with its oil and gas properties to offset taxable income in future years, due to the existence of a Net Unrealizable Built-In Loss (“NUBIL”) at the time of the change in control. Such a limitation will be effective for a five-year period subsequent to the change in control. In the event the Company has Recognized Built-In Losses (“RBIL”) during the five-year period, those losses will be limited; losses exceeding the annual limitation are carried forward as RBIL carryovers. As of December 31, 2020, the Company has approximately $9.2 million of RBIL carryovers, which carry forward indefinitely subject to the annual limitation. The Company recognizes, measures, and discloses uncertain tax positions whereby tax positions must meet a “more-likely-than-not” threshold to be recognized. During the years ended December 31, 2020 and 2019, no adjustments were recognized for uncertain tax positions. The Company files income tax returns in U.S. federal and multiple state jurisdictions. The Company is subject to tax audits in these jurisdictions until the applicable statute of limitations expires. The Company is no longer subject to U.S. federal tax examinations for tax years prior to 2016. The Company is open for various state tax examinations for tax years 2015 and later. The Company’s policy is to recognize potential interest and penalties accrued related to uncertain tax positions within income tax expense. For the years ended December 31, 2020 and 2019, the Company did not recognize any interest or penalties in its statement of operations, nor did it have any interest or penalties accrued in its balance sheet at December 31, 2020 and 2019 related to uncertain tax positions.

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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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://asc.fasb.org/extlink&oid=116825942&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 http://asc.fasb.org/extlink&oid=84230637&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 http://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 http://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 http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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