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, 2017 and 2016 is as follows (in thousands).



	December 31,
	2017			2016
Deferred tax assets
Unrealized loss on derivatives	$	3,200		$	8,734
Net operating loss carryforwards	118,134			137,757
Alternative minimum tax carryforward	—			8,633
Percentage depletion carryover	1,582			2,595
Property and equipment	—			44,391
Basis increase related to the San Mateo transaction	18,382			—
Total deferred tax assets	141,298			202,110
Valuation allowance on deferred tax assets	(89,482		)	(190,255		)
Total deferred tax assets, net of valuation allowance	51,816			11,855
Deferred tax liabilities
Property and equipment	(40,568		)	—
Other	(11,248		)	(11,855		)
Total deferred tax liabilities	(51,816		)	(11,855		)
Net deferred tax liabilities	$	—		$	—

At December 31, 2017, the Company had net operating loss carryforwards of $498.4 million for federal income tax purposes and $17.0 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 in 2027 for the federal net operating loss carryforwards. The state net operating loss carryforwards begin expiring at various dates beginning in 2024; 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 years ended December 31, 2016 and 2015, the Company recorded impairment charges of $158.6 million and $801.2 million, respectively, exclusive of tax effect, to the net capitalized costs of its oil and natural gas properties. At December 31, 2017 and 2016, the Company’s deferred tax assets exceeded its deferred tax liabilities due to the deferred tax assets generated by the impairment charges recorded in 2016 and 2015. As a result, the Company established a valuation allowance against most of the deferred tax assets beginning in the third quarter of 2015 and retained a full valuation allowance at December 31, 2017 and 2016 due to uncertainties regarding the future utilization of its deferred tax assets. The valuation allowance will continue to be recognized until the realization of future deferred tax benefits are more likely than not to be utilized.

The current income tax (benefit) provision for the years ended December 31, 2017, 2016 and 2015 was comprised of the following (in thousands).



	Year Ended December 31,
	2017			2016			2015
Current income tax provision
State income tax	$	21		$	108		$	371
Federal alternative minimum tax	(8,178		)	(1,144		)	2,588
Net current income tax (benefit) provision	$	(8,157	)	$	(1,036	)	$	2,959

Reconciliations of the tax expense (benefit) computed at the statutory federal rate to the Company’s total income tax benefit for the years ended December 31, 2017, 2016 and 2015 is as follows (in thousands).



	Year Ended December 31,
	2017			2016			2015
Federal tax expense (benefit) at statutory rate ⁽¹⁾	$	45,447		$	(34,333	)	$	(289,412	)
State income tax	368			539			(13,215		)
Permanent differences ⁽²⁾	(4,740		)	(499		)	698
Federal alternative minimum tax	—			1,144			(2,588		)
AMT credit refundable (net of sequestration)	8,178			—			—
Tax Cuts and Jobs Act rate change	51,525			—			—
Change in federal valuation allowance	(101,917		)	33,688			145,777
Change in state valuation allowance	1,139			(539		)	8,413
Net deferred income tax benefit	—			—			(150,327		)
Net current income tax (benefit) provision	(8,157		)	(1,036		)	2,959
Total income tax benefit	$	(8,157	)	$	(1,036	)	$	(147,368	)

__________________


(1)	The statutory federal tax rate was 35% for the years ended December 31, 2017, 2016 and 2015.


(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 State of New Mexico and the State of Louisiana tax returns is 2015. The earliest tax years open for examination for the federal and the State of Texas tax returns are 2013 and 2014, respectively.

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, 2017, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Cuts and Jobs Act, the Company revalued its deferred tax assets and liabilities at December 31, 2017, which resulted in a $51.5 million tax provision. As the Company maintained a valuation allowance against its federal and state deferred tax assets at December 31, 2017, a corresponding reduction in the valuation allowance was recorded against this tax provision; therefore, there was no net impact to the Company’s consolidated statement of operations for the year ended December 31, 2017 as a result of this corporate income tax rate change.

Corporate alternative minimum taxes were also repealed under the Tax Cuts and Jobs Act; therefore, corporate alternative minimum tax carryforwards will be refunded. As a result, the Company recorded $8.2 million as a current income tax benefit in its consolidated statement of operations for the year ended December 31, 2017.

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act. The Company has recognized the tax impacts related to the revaluation of deferred tax assets and liabilities and the repeal of the corporate alternative minimum tax and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate tax impacts may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Cuts and Jobs Act.