Income Taxes

12 Months Ended

Dec. 31, 2015

9. INCOME TAXES

(Loss) income before income tax benefit is as follows:

		Year Ended December 31,
		2015		2014		2013
United States	$	(3,249,590)	$	505,689	$	210,580
Foreign		37,966		31,338		23,642
Total	$	(3,211,624)	$	537,027	$	234,222


The consolidated income tax (benefit) provision is comprised of the following:
		Year Ended December 31,
		2015		2014		2013
Current tax:
U.S. federal, state and local	$	-	$	(110)	$	(8,491)
Foreign		(3,414)		(6,709)		4,881
Total current tax (benefit)		(3,414)		(6,819)		(3,610)
Deferred tax:
Foreign		(990)		995		(6)
Total deferred tax (benefit) expense		(990)		995		(6)
Total income tax (benefit)	$	(4,404)	$	(5,824)	$	(3,616)

The income tax provision (benefit) from continuing operations differs from the amount that would be computed by applying the U.S. federal income tax rate of 35% to pretax income as a result of the following:


		Year Ended December 31,
		2015		2014		2013
Income tax (benefit) provision computed at the U.S. statutory rate	$	(1,124,069)	$	187,959	$	81,978
State income tax (benefit) provision net of federal benefit		(12,998)		8,023		1,329
Valuation allowance		1,147,619		(199,038)		(81,923)
Tax effect of rate change		12,898		15,457		(2,871)
Foreign rate differential		(26,740)		(16,314)		(3,508)
Other, net		(1,114)		(1,911)		1,379

Total income tax (benefit)	$	(4,404)	$	(5,824)	$	(3,616)


The tax effects of temporary differences that give rise to significant components of the Company's deferred tax assets and liabilities are as follows:
				December 31,
				2015		2014
Deferred tax assets - current:
Incentive compensation/other, net				-		6,150
				-		6,150
Net deferred tax assets - current			$	-	$	6,150
Deferred tax liabilities - current:
Derivative instruments, net			$	-	$	36,788
Net deferred tax liabilities - current			$	-	$	36,788
Net deferred tax liability - current			$	-	$	30,638
Deferred tax assets - non-current:
Property and equipment				776,504		-
Deferred gain				44,593		48,319
U.S. federal tax credit carryforwards				16,144		16,144
U.S. net operating loss carryforwards				319,673		147,336
U.S. state net operating loss carryforwards				61,919		53,654
Non-U.S. net operating loss carryforwards				9,142		-
Asset retirement obligations				51,815		45,039
Incentive compensation/other, net				28,711		19,142
				1,308,501		329,634
Valuation allowance				(1,307,076)		(161,480)
Net deferred tax assets - non-current			$	1,425	$	168,154
Deferred tax liabilities - non-current:
Property and equipment				-		137,514
Other - non-US				1,424		-
Net non-current tax liabilities			$	1,424	$	137,514
Net non-current tax asset			$	1	$	30,640
Deferred tax liabilities - non-current:
Other - non-US				-		992

As further described in Note 1, the Company adopted ASU 2015-17 on a prospective basis in 2015. As a result, the deferred tax assets and liabilities are classified as long-term in the Consolidated Balance Sheets as of December 31, 2015.

In assessing the realizability of the deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Among other items, management considers the scheduled reversal of deferred tax liabilities, historical taxable income, projected future taxable income, and available tax planning strategies.

At December 31, 2015 and 2014, the Company recorded a valuation allowance against certain deferred tax assets of $1.3 billion and $161.5 million, respectively. Some or all of this valuation allowance may be reversed in future periods against future income. The Company’s valuation allowance changed by $1.1 billion from December 31, 2014 to December 31, 2015. Of this amount, $1.1 billion reduced the Company’s current year deferred tax benefit, and -$1.9 million was reflected through shareholders’ equity.

As of December 31, 2015, the Company had approximately $14.1 million of U.S. federal alternative minimum tax (AMT) credits available to offset regular U.S. Federal income taxes. These AMT credits do not expire and can be carried forward indefinitely. The Company has $0.5 million of general business credits available to offset U.S. federal income taxes. These general business credits expire in 2032. In addition, the Company has $1.6 million of foreign tax credit carryforwards, none of which expire prior to 2017.

The Company generated a U.S. federal tax loss of $494.8 million and $213.0 million for the years ended December 31, 2015 and 2014, respectively. The total U.S. federal tax net operating loss of $913.4 million will be carried forward to offset taxable income generated in future years, and if unutilized, will expire between 2033 and 2035. The Company has Pennsylvania state tax net operating loss carry forwards of $920.7 million which will expire between 2031 and 2035. The Company has Utah state tax net operating loss carry forwards of $65.6 million which will expire between 2033 and 2035. The Company has immaterial state tax net operating loss carry forwards in other jurisdictions, none of which expire prior to 2020. Without regard to the recorded valuation allowance, if the Company experiences or has experienced an ownership change as determined by Section 382 of the Internal Revenue Code, our ability to utilize our substantial net operating loss carryforwards and other tax attributes may be limited, if we can use them at all.

The Company generated a Canada Federal and Provincial tax loss of $61.3 million and $23.8 million for the years ended December 31, 2015 and 2014, respectively. To the extent possible, these losses will be carried back to offset taxable income generated in the prior three tax years. An income tax receivable of $5.2 million and $6.2 million has been recorded at December 31, 2015 and 2014, respectively, and is reflected as a reduction in 2015 and 2014 income tax expense in the Consolidated Statement of Operations. The remaining Canada Federal and Provincial tax loss of $33.9 million will be carried forward to offset taxable income generated in future years and will expire in 2035.

The Company did not have any unrecognized tax benefits and there was no effect on our financial condition or results of operations related to accounting for uncertain tax positions. The amount of unrecognized tax benefits did not change as of December 31, 2015.

Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the Consolidated Statements of Operations. The Company has not incurred any interest or penalties associated with unrecognized tax benefits.

The Company files a consolidated federal income tax return in the United States federal jurisdiction and various combined, consolidated, unitary, and separate filings in several states, and international jurisdictions. With certain exceptions, the income tax years 2012 through 2015 remain open to examination by the major taxing jurisdictions in which the Company has business activity.

The undistributed earnings of the Company’s U.S. subsidiaries are considered to be indefinitely invested outside of Canada. Accordingly, no provision for Canadian income taxes and/or withholding taxes has been provided thereon.