XML 33 R18.htm IDEA: XBRL DOCUMENT
v3.23.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES The components of the income tax provision for the years ended December 31, 2022 and 2021 include the following: SCHEDULE OF INCOME TAX PROVISIONS
|  | 2022 |  |  | 2021 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |
State |  |  | 28 |  |  |  | - |
Total current income tax |  | $ | 28 |  |  | $ | - |
Deferred: |  |  |  |  |  |  |  |
Federal |  | $ | (1,765 | ) |  | $ | - |
State |  |  | (156 | ) |  |  | - |
Total deferred income taxes |  | $ | (1,921 | ) |  |  | - |
Total income tax provision |  | $ | (1,893 | ) |  | $ | - |
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: SCHEDULE OF EFFECTIVE INCOME TAX
|  | 2022 |  |  | 2021 |
|  | (in thousands) |
Income tax benefit at federal statutory rate (21%) |  | $ | (600 | ) |  | $ | (372 | )
State income tax benefit, net of federal benefit |  |  | (95 | ) |  |  | (26 | )
Change in value of warrant |  |  | - |  |  |  | (16 | )
Percentage depletion carryover |  |  | - |  |  |  | (50 | )
Prior year true up |  |  | (509 | ) |  |  | (14 | )
Compensation and other |  |  | 187 |  |  |  | 2 |
Acquisition |  |  | 1,056 |  |  |  | - |
Change in valuation allowance |  |  | (1,932 | ) |  |  | 476 |
Income tax benefit |  | $ | (1,893 | ) |  | $ | - |
The components of deferred tax assets and liabilities as of December 31, 2022 and 2021 are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
|  | 2022 |  |  | 2021 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryover |  | $ | 8,443 |  |  | $ | 6,295 |
Property and equipment |  |  | - |  |  |  | 3,115 |
Percentage depletion and contribution carryovers |  |  | 2,004 |  |  |  | 1,947 |
Equity method investment and other |  |  | 249 |  |  |  | 225 |
Deferred compensation liability |  |  | 256 |  |  |  | 9 |
Asset retirement obligations |  |  | 3,581 |  |  |  | 327 |
Stock-based compensation |  |  | 439 |  |  |  | 190 |
Lease obligations |  |  | 224 |  |  |  | 30 |
Derivatives |  |  | 390 |  |  |  | - |
Total deferred tax assets |  |  | 15,586 |  |  |  | 12,138 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (6,107 | ) |  |  | - |
Lease assets |  |  | (198 | ) |  |  | (27 | )
Total deferred tax liabilities |  |  | (6,305 | ) |  |  | (27 | )
Net deferred tax assets |  |  | 9,281 |  |  |  | 12,111 |
Less valuation allowance |  |  | (10,179 | ) |  |  | (12,111 | )
Net deferred tax liability |  | $ | (898 | ) |  | $ | - |
As of December 31, 2022, the Company has approximately $22.2 million in net operating loss carryovers (after limitations) for federal income tax purposes. The net operating losses incurred prior to January 5, 2022 are subject to an Internal Revenue Code (“I.R.C.”) Section 382 limitation as a result of a change of control incurred in conjunction with the transaction that closed on that date. Losses incurred prior to 2018 have a carryforward period of 20 years and begin to expire in 2037. Losses incurred after 2017 have an indefinite carryforward period but are limited to offsetting 80% of taxable income in any given year. I.R.C. Section 382 limits the Company’s ability to utilize certain tax attributes to offset taxable income in future years. Due to the existence of a net unrealizable built in loss (“NUBIL”), assets at the time of the 2017 change in control, the Company also has realized built in losses (“RBIL”) that exceed the annual limitation. As of December 31, 2022, the Company has approximately $10.5 million of RBIL carryovers, which carry forward indefinitely subject to the annual limitation. On January 5, 2022, the Company received assets in exchange for common stock of the Company. The transaction was an IRC Section 351 contribution for which the Company received carryover basis in the assets. At the date of the transaction, the Company recorded a deferred tax liability for the difference in the book and tax basis in the underlying assets and recorded the related adjustment of $2.8 million to proved oil and gas properties. As a result of recording the deferred tax liability, the Company released a portion of the existing valuation allowance and recorded a tax benefit. 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, 2022 and 2021, 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. With certain exceptions, the Company is no longer subject to U.S. federal tax examinations for tax years prior to 2019. Similarly, the Company is open for various state tax examinations for tax years 2018 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, 2022 and 2021, 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, 2022 and 2021 related to uncertain tax positions.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration