INCOME TAXES

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Altus Midstream Company is subject to U.S. federal income tax and Texas Margin tax. Altus Midstream LP is a partnership for federal income tax purposes and passes through its taxable income to its partners, Apache Corporation and Altus Midstream Company. Thus, Altus Midstream LP does not record a federal income tax provision. Altus Midstream LP is subject to the Texas Margin tax and as such, records a state income tax provision. At March 31, 2019, Altus Midstream Company had a net deferred tax asset of $67.3 million and Altus Midstream LP had a net deferred state income tax liability of $2.8 million.

During the first quarter of 2019, the Company’s effective income tax rate was primarily impacted by net income attributable to the noncontrolling interest and the impact of state income taxes. During the first quarter of 2018, the Company’s effective income tax rate was primarily impacted by an increase in the U.S. valuation allowance and the impact of state income taxes.

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. Each quarter the Company assesses the amounts provided for and, as a result, may increase (expense) or reduce (benefit) the amount of interest and penalties. As of March 31, 2019, the Company did not have any uncertain tax positions that would require recognition. Uncertain tax positions may change in the next twelve months; however, we do not expect any possible change to have a significant impact on our results of operation or financial position. If incurred, the Company will record income tax interest and penalties as a component of income tax expense. The contributor of Altus Midstream’s operating assets, Apache, is currently under IRS audit for the 2014 - 2016 tax years as part of its normal course of business.