Deferred 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, 2015 and 2014, respectively, is as follows (in thousands).



	December 31,
	2015			2014
Deferred tax assets
Net operating loss carryforwards	$	79,208		$	88,447
Alternative minimum tax carryforward	9,785			7,197
Percentage depletion carryover	2,442			2,068
Property and equipment	42,757			113
Deferred gain on sale leaseback transaction	32,831			—
Other	7,396			281
Total deferred tax assets	174,419			98,106
Valuation allowance on deferred tax assets	(154,320		)	—
Total deferred tax assets, net of valuation allowance	20,099			98,106
Deferred tax liabilities
Unrealized gain on derivatives	(5,699		)	(20,145		)
Property and equipment	—			(145,620		)
Other	(14,400		)	(5,875		)
Total deferred tax liabilities	(20,099		)	(171,640		)
Net deferred tax liabilities	$	—		$	(73,534	)

The Company reported a net loss for the year ended December 31, 2015. The Company had an effective tax rate of 36.8% for the year ended December 31, 2014. Total income tax expense for the year ended December 31, 2014 differed from amounts computed by applying the U.S. federal statutory rates to pre-tax income primarily due to the impact of state income taxes.

At December 31, 2015, the Company had net operating loss carryforwards of $212.5 million for federal income tax purposes and $4.8 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.

As a result of the net capitalized costs of the Company’s oil and natural gas properties less related deferred income taxes exceeding the full-cost ceiling during the year ended December 31, 2015, the Company recorded an impairment charge of $801.2 million, exclusive of tax effect, to the net capitalized costs of its oil and natural gas properties. At December 31, 2015, the Company’s deferred tax assets exceeded its deferred tax liabilities due to the deferred tax assets generated by the impairment charges recorded; as a result, the Company established a valuation allowance of $154.3 million against the Company’s federal and state deferred tax assets. The valuation allowance will continue to be recognized until the realization of future tax benefits are more likely than not to be utilized.

No impairment to the net carrying value of the Company’s oil and natural gas properties and no corresponding charge resulting from a full-cost ceiling impairment was recorded during the year ended December 31, 2014.

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. As a result, the Company recorded an impairment charge of $21.2 million, exclusive of tax effect, to the net capitalized costs of its oil and natural gas properties. This charge is reflected in the Company’s consolidated statement of operations for the year ended December 31, 2013.

The income tax expense reconciled to the tax computed at the statutory federal rate for the years ended December 31, 2015, 2014 and 2013, respectively, is as follows (in thousands).



	Year Ended December 31,
	2015			2014			2013
Current income tax provision
State income tax	$	371		$	—		$	—
Federal alternative minimum tax	2,588			133			404
Net current income tax provision	2,959			133			404
Deferred income tax provision (benefit)
Federal tax expense at statutory rate ⁽¹⁾	(289,412		)	61,301			19,177
State income tax	(13,215		)	2,707			431
Permanent differences ⁽²⁾	698			397			319
Federal alternative minimum tax	(2,588		)	(133		)	(404		)
Change in federal valuation allowance	145,777			—			(8,885		)
Change in state valuation allowance	8,413			(30		)	(1,345		)
Net deferred income tax (benefit) provision	(150,327		)	64,242			9,293
Total income tax (benefit) provision	$	(147,368	)	$	64,375		$	9,697

__________________


(1)	The statutory federal tax rate was 35% for the years ended December 31, 2015, 2014 and 2013.


(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 earliest tax year open for examination for the federal, the state of New Mexico and the state of Louisiana tax returns is 2012. The earliest tax year open for examination by the state of Texas is 2009. During the year ended December 31, 2015, the Company’s 2009 and 2010 franchise tax returns were under examination by the state of Texas. This examination has been completed with no additional tax due; however, the examination has not been formally closed. In addition, as of December 31, 2015, the Company’s 2013 federal income tax return was under examination by the Internal Revenue Service. This examination is in the preliminary stage and no additional income taxes or refunds of previous tax payments for 2013 had been recorded as a result of this examination at December 31, 2015.

The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would more likely than not be sustained by examination. Therefore, at December 31, 2015, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.