XML 35 R16.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
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, 2023 and 2022 is as follows (in thousands).
December 31,
 20232022
Deferred tax assets
Net operating loss carryforwards$14,387 $12,874 
Compensation13,303 14,184 
Research and experimental tax credits, net of reserve12,638 — 
Lease liabilities9,723 12,585 
Other451 1,934 
Total deferred tax assets50,502 41,577 
Valuation allowance on deferred tax assets(12,556)(11,322)
Total deferred tax assets, net of valuation allowance37,946 30,255 
Deferred tax liabilities
Property and equipment(534,538)(378,925)
Less than wholly-owned subsidiaries(71,735)(63,388)
Lease right of use assets(9,723)(12,585)
Unrealized gain on derivatives(676)(995)
Other(2,713)(2,713)
Total deferred tax liabilities(619,385)(458,606)
Net deferred tax liabilities$(581,439)$(428,351)
The current income tax provision and the deferred income tax provision for the years ended December 31, 2023, 2022 and 2021 were comprised of the following (in thousands). 
Year Ended December 31,
 202320222021
Current income tax provision
Federal income tax$1,554 $31,335 $— 
State income tax12,368 23,542 — 
Net current income tax provision$13,922 $54,877 $— 
Deferred income tax provision
Federal income tax$145,711 $302,486 $44,883 
State income tax26,393 41,994 29,827 
Net deferred income tax provision$172,104 $344,480 $74,710 
Reconciliations of the tax expense computed at the statutory federal rate to the Company’s total income tax provision for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands). 
Year Ended December 31,
 202320222021
Federal tax expense at statutory rate(1)
$230,241 $353,992 $150,223 
State income tax expense 38,525 59,870 26,646 
Permanent differences3,558 (84)9,612 
Non-controlling interest in subsidiaries(13,500)(15,143)(11,690)
Tax credits generated(109,368)— — 
Reserve on uncertain tax positions35,336 — — 
Change in federal valuation allowance— — (103,262)
Change in state valuation allowance1,234 722 3,181 
Total income tax provision$186,026 $399,357 $74,710 
__________________    
(1)The statutory federal tax rate was 21% for the years ended December 31, 2023, 2022 and 2021.
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 2020. The earliest tax year open for examination for the State of Texas tax return is 2019.
As of December 31, 2023, the Company had unrecognized tax benefits (“UTB”) of $35.3 million as a result of research and experimental expenditures related to horizontal drilling and completion innovations, which would reduce the Company’s effective tax rate in future periods if and when realized. There were no UTBs as of December 31, 2022 or 2021. Although the Company does not anticipate a material change in UTBs within the next 12 months, the timing as to when the Company will substantially resolve the uncertainties associated with the UTBs is unknown.
A reconciliation of UTBs for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands).
Year Ended December 31,
 202320222021
Balance at beginning of period $— $— $— 
Additions for tax positions35,336 — — 
Balance at end of period(1)
$35,336 $— $— 
__________________    
(1)At December 31, 2023, the UTBs related to the U.S. federal and state of Texas jurisdictions were $30.7 million and $4.6 million, respectively.