Components of (loss) income from operations before income taxes are as follows:



	Year Ended December 31,
(millions)	2019			2018			2017
Domestic	$	(2,222	)	$	(953	)	$	(2,831	)
Foreign	446			1,093			640
Total	$	(1,776	)	$	140		$	(2,191	)

Income Tax Provision The income tax (benefit) provision consists of the following:



	Year Ended December 31,
(millions, except percentages)	2019			2018			2017
Current Taxes
Federal	$	1		$	22		$	(11	)
State	3			2			1
Foreign	81			172			96
Total Current	$	85		$	196		$	86
Deferred Taxes
Federal	$	(413	)	$	(123	)	$	(1,258	)
State	(25		)	(7		)	(8		)
Foreign	10			60			39
Total Deferred	$	(428	)	$	(70	)	$	(1,227	)
Total Income Tax (Benefit) Provision Attributable to Noble Energy	$	(343	)	$	126		$	(1,141	)
Effective Tax Rate	19.3		%	90.0		%	52.1		%

The 2019 deferred income tax benefit relates to the asset impairment recorded in fourth quarter 2019. See Note 10. Impairments. The 2018 income tax provision is primarily due to current income tax expense for foreign taxes on the gain recognized for the 2018 divestiture of a 7.5% working interest in the Tamar field, partially offset by a deferred income tax benefit. The 2017 income tax benefit is due to the significant deferred tax benefit associated with the revaluation of the US deferred tax liability as a result of the reduction in the federal corporate tax rate to 21%.

Effective Tax Rate (ETR) A reconciliation of the federal statutory tax rate to the ETR is as follows:



	Year Ended December 31,
(percentages)	2019		2018		2017
Federal Statutory Rate	21.0	%	21.0	%	35.0	%
Effect of
Goodwill Impairment	—		192.5		—
Change in Valuation Allowance	(0.6	)	(170.2	)	(17.4	)
US and Foreign Statutory Rate Change	—		80.7		23.5
Accumulated Undistributed Foreign Earnings	—		—		11.0
Transition Tax	—		—		(4.8	)
Difference Between US and Foreign Rates	(0.6	)	17.9		1.8
Earnings of Equity Method Investments	0.7		(20.1	)	1.9
Noncontrolling Interests	0.9		(12.1	)	1.1
State Taxes	1.1		0.9		0.3
Foreign Exploration Loss	—		(35.6	)	—
Global Intangible Low-Taxed Income (GILTI)	(0.8	)	24.2		—
Return to Provision	—		(17.1	)	(0.1	)
Audit Settlement	—		5.1		0.1
Oil Profits Tax - Israel	(0.1	)	3.3		(0.1	)
Other, Net	(2.3	)	(0.5	)	(0.2	)
Effective Rate	19.3	%	90.0	%	52.1	%

There were no material items impacting our 2019 ETR as compared to the federal statutory rate of 21%. Our 2018 ETR included a significant deferred tax benefit, discussed below, recorded as a result of the intent of the US Department of the Treasury (Treasury) and Internal Revenue Service (IRS) to issue additional regulatory guidance associated with the Tax Cuts and Jobs Act (Tax Reform Legislation) and the transition tax. In addition, the 2018 ETR was impacted by low earnings, goodwill impairment with no tax benefit, deferred tax expense of $34 million related to GILTI, discussed below, and a deferred tax benefit of $50 million associated with a write-off of foreign exploration losses. Our 2017 ETR was driven by the deferred tax benefit related to the Tax Reform Legislation, as we revalued the ending deferred tax liability at the reduced future tax rate.

Deferred Tax Assets and Liabilities Deferred tax assets and liabilities resulted from the following:



	December 31,
(millions)	2019			2018
Deferred Tax Assets
Loss Carryforwards ⁽¹⁾	$	656		$	589
Employee Compensation and Benefits	92			92
Mark to Market of Commodity Derivative Instruments	11			(27		)
Foreign Tax Credits	133			138
Other	126			157
Total Deferred Tax Assets	$	1,018		$	949
Valuation Allowance - Foreign Loss Carryforwards and Foreign Tax Credits	(327		)	(320		)
Net Deferred Tax Assets	$	691		$	629
Deferred Tax Liabilities
Property, Plant and Equipment, Principally Due to Differences in Depreciation, Amortization, Lease Impairment and Abandonments	(1,338		)	(1,669		)
Total Deferred Tax Liability	$	(1,338	)	$	(1,669	)
Net Deferred Tax Liability	$	(647	)	$	(1,040	)

Net deferred tax assets and liabilities were classified in the consolidated balance sheets as follows:



	December 31,
(millions)	2019			2018
Deferred Income Tax Asset - Noncurrent	$	15		$	21
Deferred Income Tax Liability - Noncurrent	(662		)	(1,061		)
Net Deferred Tax Liability	$	(647	)	$	(1,040	)

Our estimated pre-tax net operating loss (NOL) carryforwards totaled approximately $2.7 billion at December 31, 2019, of which US federal income tax NOL carryforwards totaled approximately $2.0 billion and foreign NOL carryforwards totaled $691 million.

We currently have a valuation allowance on the deferred tax assets associated with foreign loss carryforwards and foreign tax credits. The valuation allowance on foreign loss carryforwards totaled $192 million and $187 million in 2019 and 2018, respectively. The valuation allowance on foreign tax credits totaled $133 million and $132 million in 2019 and 2018, respectively.

Accumulated Undistributed Earnings of Foreign Subsidiaries As of December 31, 2019, there is no expected withholding tax impact upon actual distribution of earnings and as such, we have not recorded any tax associated with unremitted earnings.

Tax Reform Legislation Updates Since the enactment of Tax Reform Legislation by the US Congress in December 2017, Treasury and the IRS have periodically issued guidance regarding various aspects of the new law.

Global Intangible Low-Taxed Income (GILTI) Tax Reform Legislation introduced a new tax on GILTI. Further analysis and legal interpretation has resulted in identifying certain foreign oil related income (FORI) activity as GILTI income which will be offset by NOL carryforwards rather than the 50% deduction and related foreign tax credits. As a result of utilizing our NOL to offset the GILTI inclusion, for 2019 and 2018, we recognized tax expense of $14 million and $34 million, respectively, of GILTI associated with FORI from investments in Equatorial Guinea and Israel.

In June 2019, Treasury and the IRS released new proposed regulations pertaining to GILTI, which include an election that would apply an elective high-tax exception to GILTI when the tax imposed on a tentative net tested income item exceeds an 18.5% corporate tax rate. The applicability of the high-tax exception would be tested at the level of a single qualified business unit (QBU) and would apply to all foreign corporations controlled by the same domestic shareholders. This regulation is applicable to taxable years beginning on or after the date that final regulations are published in the Federal Register. For us, this high tax exception would have the effect of reclassifying all GILTI into another classification of income, thus eliminating the GILTI/NOL offset item described above. We will continue to monitor the development of this proposed regulation.

Transition Tax (Toll Tax) Tax Reform Legislation provided for a toll tax on a one-time “deemed repatriation” of accumulated foreign earnings for the year ended December 31, 2017. In April 2018, the Treasury and the IRS released Notice 2018-26, signaling intent to issue regulations related to the toll tax for the year ended December 31, 2017. This notice clarified that an Internal Revenue Code Section 965(n) election is available with respect to both current and prior year NOLs. As a result, we released $252 million of the valuation allowance recorded against foreign tax credits to be utilized against the estimated $268 million toll tax liability recorded as of December 31, 2017. This resulted in a $252 million tax benefit and a corresponding expense of $107 million for the tax rate change adjustment on the previously utilized NOLs. The impact on first quarter 2018 total tax expense, related to this additional guidance, was a net $145 million discrete tax benefit.

During fourth quarter 2018, the toll tax calculations were finalized in conjunction with filing of the US tax return, resulting in a $261 million toll tax against which $240 million of foreign tax credits were utilized. This resulted in a $21 million liability payable in installments over eight years beginning in 2018.

Other Provisions Tax Reform Legislation broadened the former Section 163(j) applying a net interest expense limitation equal to 30% of earnings before interest, taxes, depreciation, and amortization (EBITDA) for tax years beginning after December 31, 2017, and before January 1, 2022, after which the net interest expense limitation will be calculated as 30% of earnings before interest and taxes (EBIT). Disallowed interest may be carried forward indefinitely. In November 2018, Treasury and the IRS released proposed regulations pertaining to section 163(j) which state that any amount normally incurred as deductible DD&A, but included in a taxpayer’s cost of goods sold calculation pursuant to section 263A, is not a deduction for DD&A for purposes of determining Adjusted Taxable Income for years beginning prior to January 1, 2022. We have modified our 163(j) limitation calculation to comply and will continue to monitor the development of this proposed regulation.

Israeli Tax Law Our Israeli operations are subject to the Natural Resources Profits Taxation Law, 2011 (the Law), which imposes a separate additional tax on profits from oil and gas activities (Oil Profits Tax). The Oil Profits Tax is calculated by dividing net accumulated revenue generated by each separate project by its cumulative investments as defined within the

Law. Once the revenue factor (R Factor) reaches 1.5, a tax rate of 20% is imposed; as the ratio increases to a maximum of 2.3, the Oil Profits Tax increases progressively up to a maximum rate of 50%. The Oil Profits Tax provides for a corporate tax rate adjustment based on the corporate income tax rate, which is currently 23%. To the extent the corporate income tax rate exceeds 18%, a reduction in the Oil Profits Tax rate is calculated. At the current corporate tax rate, the Oil Profits Tax rate is 46.8%. The Oil Profits Tax is deductible for Israeli corporate tax purposes. Our Tamar and Leviathan projects are both subject to the Oil Profits Tax and are expected to pay at the maximum rate.

Clayton Williams Energy Acquisition In April 2017, we completed the Clayton Williams Energy Acquisition, which qualified as a tax free merger, and acquired carryover tax basis in Clayton Williams Energy's assets and liabilities. As part of our purchase price allocation we recorded a deferred tax liability of $307 million, adjusted for the new US statutory rate, which includes a deferred tax asset for federal pre-tax NOLs of approximately $450 million. The merger resulted in a change of control for federal income tax purposes, and the NOL usage will be subject to an annual limitation in part based on Clayton Williams Energy's value at the date of the merger.

Unrecognized Tax Benefits We file a consolidated income tax return in the US federal jurisdiction, and we file income tax returns in various states and foreign jurisdictions. Our income tax returns are routinely audited by the applicable revenue authorities, and provisions are made in the financial statements for differences between positions taken in tax returns and amounts recognized in the financial statements in anticipation of audit results.