eferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax bases of assets and liabilities. The Company’s net deferred tax position as of December 31, 2013 and 2012, respectively, is as follows (in thousands).



	December 31,
	2013			2012
Current deferred tax assets
Property and equipment	$	62		$	233
Unrealized loss on derivatives	965			—
Other	609			869
Total current deferred tax assets	1,636			1,102
Valuation allowance on current deferred tax assets	—			(202		)
Total current deferred tax assets, net of valuation allowance	1,636			900
Current deferred tax liabilities
Unrealized gain on derivatives	—			(1,311		)
Net current deferred tax assets (liabilities)	$	1,636		$	(411	)
Non-current deferred tax assets
Unrealized loss on derivatives	$	28		$	—
Net operating loss carryforwards	63,007			44,654
Alternative minimum tax carryforward	7,064			6,660
Total non-current deferred tax assets	70,099			51,314
Valuation allowance on non-current deferred tax assets	(30		)	(10,058		)
Total non-current deferred tax assets, net of valuation allowance	70,069			41,256
Non-current deferred tax liabilities
Unrealized gain on derivatives	—			(262		)
Property and equipment	(76,719		)	(36,363		)
Other	(4,279		)	(4,220		)
Total non-current deferred tax liabilities	(80,998		)	(40,845		)
Net non-current deferred tax (liabilities) assets	$	(10,929	)	$	411

The Company had an effective tax rate of 17.7% for the year ended December 31, 2013. Total income tax expense for the year ended December 31, 2013 differed from amounts computed by applying the U.S. federal statutory tax rates to pre-tax income due primarily to (i) the reversal of a valuation allowance of approximately $8.9 million on the Company’s federal deferred tax assets at December 31, 2012, as the Company’s federal deferred tax liabilities exceeded its federal deferred tax assets for the year ended December 31, 2013, (ii) the reversal of a state valuation allowance of approximately $1.3 million as the Company now believes it will be able to utilize the state net operating losses prior to their expiration and (iii) the impact of permanent differences between book and taxable income. The Company reported a net loss for the years ended December 31, 2012 and 2011.

At December 31, 2013, the Company had net operating loss carryforwards of $171.3 million for federal income tax purposes and $3.1 million for state income tax purposes available to offset future taxable income, as limited by the applicable provisions, and which expire at various dates beginning December 31, 2027 for the federal net operating loss carryforwards. The state net operating loss carryforwards began expiring at various dates beginning December 31, 2013 for the state of New Mexico; however, the significant portion of the Company’s state net operating loss carryforwards expire beginning in 2027.

At March 31, 2013, the net capitalized costs of the Company’s oil and natural gas properties less related deferred income taxes exceeded the full-cost ceiling by $13.7 million. As a result, the Company recorded an impairment charge of $21.2 million to its net capitalized costs and a deferred income tax credit of $7.5 million for the three months ended March 31, 2013. The Company established a valuation allowance at September 30, 2012 and retained full valuation allowances of approximately$15.8 million at March 31, 2013 and $6.7 million at June 30, 2013 due to uncertainties regarding the future realization of the net deferred tax assets.

At June 30, 2012, the net capitalized costs of the Company’s oil and natural gas properties less related deferred income taxes exceeded the full-cost ceiling by $21.3 million. As a result, the Company recorded an impairment charge of $33.2 million to the net capitalized costs of its oil and natural gas properties and a deferred income tax credit of $11.9 million. At September 30, 2012, the net capitalized costs of the Company’s oil and natural gas properties less related deferred income taxes exceeded the full-cost ceiling by $2.3 million. As a result, the Company recorded an impairment charge of $3.6 million to the net capitalized costs of its oil and natural gas properties and a deferred income tax credit of $1.3 million. This deferred income tax credit exceeded the Company’s deferred tax liabilities at September 30, 2012. As a result, the Company established a valuation allowance of $2.4 million at September 30, 2012 due to uncertainties regarding the future realization of its deferred tax assets. At December 31, 2012, the net capitalized costs of the Company’s oil and natural gas properties less related deferred income taxes exceeded the full-cost ceiling by $17.3 million. As a result, the Company recorded an impairment charge of $26.7 million to the net capitalized costs of its oil and natural gas properties and a deferred income tax credit of $9.4 million. This deferred income tax credit exceeded the Company’s deferred tax liabilities at December 31, 2012. As a result, the Company increased the previously established valuation allowance by $7.9 million to maintain a full valuation allowance of $10.3 million against the Company’s net deferred tax assets.

At March 31, 2011, the Company recorded an impairment charge of $23.0 million to its net capitalized costs, net of a deferred income tax credit of $12.7 million related to the full-cost ceiling limitation. This deferred income tax credit exceeded the Company’s deferred tax liabilities at March 31, 2011. As a result, the Company established a valuation allowance at March 31, 2011 and retained a valuation allowance until the quarter ended December 31, 2011 due to uncertainties regarding the future realization of its deferred tax assets. At December 31, 2011, the Company assessed the valuation allowance and determined that the allowance was no longer required.

The income tax expense reconciled to the tax computed at the statutory federal rate for the years ended December 31, 2013, 2012 and 2011, respectively, is as follows (in thousands).



	Year Ended December 31,
	2013			2012			2011
Current income tax provision (benefit)
State income tax	$	—		$	—		$	(46	)
Federal alternative minimum tax	404			—			—
Net current income tax provision (benefit)	404			—			(46		)
Deferred income tax provision (benefit)
Federal tax expense at statutory rate ⁽¹⁾	19,177			(11,767		)	(5,319		)
Statutory depletion carryforward	—			—			231
State income tax	431			(819		)	(435		)
Nondeductible expense	—			(122		)	48
Permanent differences ⁽²⁾	319			1,018			—
Federal alternative minimum tax	(404		)	—			—
Change in federal valuation allowance	(8,885		)	10,260			—
Change in state valuation allowance	(1,345		)	—			—
Net deferred income tax provision (benefit)	9,293			(1,430		)	(5,475		)
Total income tax provision (benefit)	$	9,697		$	(1,430	)	$	(5,521	)

__________________


(1)	The statutory federal tax rate was 35% for the year ended December 31, 2013 and 34% for the years ended December 31, 2012 and 2011.


(2)	Amount is primarily attributable to stock-based compensation.

The Company files a United States federal income tax return and several state tax returns, a number of which remain open for examination. The tax years open for examination for the federal tax return are 2010, 2011, 2012 and 2013. The tax years open for examination by the state of Texas are 2009, 2010, 2011, 2012 and 2013. The tax years open for examination by the state of New Mexico are 2010, 2011, 2012 and 2013. The tax years open for examination by the state of Louisiana are 2010, 2011, 2012 and 2013. As of December 31, 2013, the Company's 2009, 2010, 2011 and 2012 franchise tax returns are under examination by the state of Texas. This examination is in the preliminary stage and no additional income taxes or refunds of previous tax payments for these tax years have been recorded as a result of this examination at December 31, 2013.

The Company has evaluated all tax positions for which the statute of limitations remained open and believes that the material positions taken would more likely than not be sustained by examination. Therefore, at December 31, 2013, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.