Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table summarizes our provision for income taxes for the periods presented: 
  Year Ended December 31,
  2020 2019 2018
Current income taxes (benefit)  
Federal $ (1,236) $ (1,236) $ (2,471)
State 357  —  — 
  (879) (1,236) (2,471)
Deferred income taxes (benefit)  
Federal 1,236  1,236  2,471 
State (2,660) 2,137  523 
  (1,424) 3,373  2,994 
  $ (2,303) $ 2,137  $ 523 
The following table reconciles the difference between the income tax expense (benefit) computed by applying the statutory tax rate to our income (loss) before income taxes and our reported income tax expense (benefit) for the periods presented: 
  Year Ended December 31,
  2020 2019 2018
Computed at federal statutory rate $ (65,701) (21.0) % $ 15,272  21.0  % $ 47,315  21.0  %
State income taxes, net of federal income tax benefit (1,856) (0.6) % 1,494  2.1  % 1,743  0.8  %
Change in valuation allowance 64,062  20.5  % (14,240) (19.6) % (48,820) (21.7) %
Other, net 1,192  0.4  % (389) (0.5) % 285  0.1  %
  $ (2,303) (0.7) % $ 2,137  3.0  % $ 523  0.2  %
The following table summarizes the principal components of our deferred income tax assets and liabilities as of the dates presented: 
  December 31,
  2020 2019
Deferred tax assets:    
Net operating loss (“NOL”) carryforwards $ 180,531  $ 175,221 
Alternative minimum tax (“AMT”) credit carryforwards —  1,236 
Asset retirement obligations 1,188  1,073 
Pension and postretirement benefits 301  340 
Share-based compensation 467  880 
Fair value of derivative instruments 2,737  4,191 
Interest expense limitation —  11,463 
ROU assets 564  — 
Other 1,484  2,441 
187,272  196,845 
Less:  Valuation allowance (179,006) (114,939)
Total net deferred tax assets 8,266  81,906 
Deferred tax liabilities:
Property and equipment 7,728  83,330 
ROU obligations 538  — 
Total deferred tax liabilities 8,266  83,330 
Net deferred tax liabilities $ —  $ (1,424)
Income Tax Provision
The provision for the years ended December 31, 2020, 2019 and 2018 includes current federal benefits of $1.2 million, $1.2 million and $2.5 million attributable to refunds of AMT credits for the 2020, 2019 and 2018 tax years, respectively. The amounts attributable to 2020 combined the amounts attributable to 2019, which had been recognized on our Consolidated Balance Sheet as of December 31, 2019 as a current asset, were received in 2020 as an acceleration of all AMT credits in connection with certain provisions of the CARES Act. The $2.5 million attributable to 2018 was refunded to us in 2019. These benefits have been offset by corresponding decreases in the deferred tax asset associated with AMT credit carryforwards giving rise to deferred federal expenses for the years ended December 31, 2020, 2019 and 2018, respectively. In addition, we have recognized deferred state tax benefits of $2.7 million and expenses of $2.1 million and $0.5 million attributable to property and equipment as well as $0.4 million of current state expense attributable to the Texas margin tax for the year ended December 31, 2020 for overall effective tax rates of 0.7%, 3.0% and 0.2% for the years ended December 31, 2020, 2019 and 2018, respectively.
Deferred Tax Assets and Liabilities
As of December 31, 2020, we had federal NOL carryforwards of approximately $638.6 million, a substantial portion of which, if not utilized, expire between 2032 and 2037. NOLs incurred after January 1, 2018 can be carried forward indefinitely. Because of the change in ownership provisions of the Code, use of a portion of our federal NOLs may be limited in future periods. As of December 31, 2020, we carried a valuation allowance against our federal and state deferred tax assets of $179.0 million. We considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. The amount of deferred tax assets considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence is no longer present and additional weight is given to subjective positive evidence, including projections for growth. The valuation allowance along with $8.3 million of deferred tax liabilities fully offset our deferred tax assets. Accordingly, there are no net deferred tax assets or liabilities reflected on our Consolidated Balance Sheet as of December 31, 2020.
The net deferred tax liability recognized on the Consolidated Balance Sheet as of December 31, 2019 is attributable to certain state deferred tax liabilities associated with property and equipment in excess of federal deferred tax assets associated with refundable AMT credit carryforwards for tax years ending after 2019.
Other Income Tax Matters
We had no liability for unrecognized tax benefits as of December 31, 2020 and 2019. There were no interest and penalty charges recognized during the years ended December 31, 2020, 2019 and 2018. Tax years from 2015 forward remain open for examination by the Internal Revenue Service and various state jurisdictions.