INCOME TAXES

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

The table below presents the components of our provision for income tax (expense) benefit for the years presented:

	Year Ended December 31,
	2019			2018			2017
	(in thousands)
Current:
Federal	$	1,366		$	887		$	8,443
State	(300		)	(188		)	(200		)
Total current income tax benefit	1,066			699			8,243
Deferred:
Federal	4,507			(1,986		)	193,809
State	(2,251		)	(4,119		)	9,876
Total deferred income tax (expense) benefit	2,256			(6,105		)	203,685
Income tax (expense) benefit	$	3,322		$	(5,406	)	$	211,928

The following table presents a reconciliation of the federal statutory rate to the effective tax rate related to our (expense) benefit for income taxes:

	Year Ended December 31,
	2019		2018		2017
Federal statutory tax rate	21.0	%	21.0	%	35.0	%
State income tax, net	3.6		(6.4	)	1.8
Federal tax credits	(3.3	)	(52.1	)	—
Effect of state income tax rate changes	(6.4	)	6.7		—
Change in valuation allowance	(0.6	)	45.5		—
Non-deductible compensation	(5.0	)	21.8		(0.3	)
Non-deductible acquisition costs	(2.3	)	—		—
Non-deductible government relations	(1.0	)	31.8		—
Other non-deductible items	(0.5	)	4.9		—
Federal tax reform rate reduction	—		—		33.7
Non-deductible goodwill impairment	—		—		(7.7	)
Other	—		(0.4	)	(0.1	)
Effective tax rate	5.5	%	72.8	%	62.4	%

Tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are presented below.

	As of December 31,
	2019			2018
	(in thousands)
Deferred tax assets:
Deferred compensation	$	9,905		$	9,963
Asset retirement obligations	30,993			27,166
Federal NOL carryforward	22,965			54,736
State NOL and tax credit carryforwards, net	9,508			13,223
Federal tax - credit carryforwards	4,448			7,756
Prepaid revenue	4,874			5,288
Other	3,887			4,647
Valuation allowance	(3,775		)	(3,380		)
Total gross deferred tax assets	82,805			119,399
Deferred tax liabilities:
Properties and equipment	268,234			270,565
Net change in fair value of unsettled derivatives	6,841			41,496
Convertible debt	3,571			5,434
Total gross deferred tax liabilities	278,646			317,495
Net deferred tax liability	$	195,841		$	198,096

As of December 31, 2019, we have prior year federal NOL carryforwards of $175.7 million of which $31.5 million will begin to expire in 2036. Also, we acquired a federal NOL of $60.1 million as a component of our 2016 acquisition in the Delaware Basin that will begin to expire in 2034 and is subject to an annual limitation of $15.1 million as a result of the acquisition, which constitutes a change of ownership as defined under IRS Code Section 382. We expect to utilize $126.4 million of these NOLs to offset current federal taxable income.

As of December 31, 2019, we have state NOL carryforwards of $265.9 million that begin to expire in 2030 and state credit carryforwards of $4.0 million that begin to expire in 2022. We expect to utilize $98.0 million of these NOLs to offset current state taxable income. Due to the potential non-utilization of our state tax credit carryforwards before their expiration, we have recorded a valuation allowance for the future tax benefit of these credit carryforwards.

Unrecognized tax benefits and related accrued interest and penalties were immaterial for the three-year period ended December 31, 2019. The statutes of limitations for most of our state tax jurisdictions are open for tax year 2015 forward.

The IRS partially accepted our 2018 tax return. The 2018 tax return is in the IRS CAP Program post-filing review process, with no significant tax adjustments currently proposed. We continue to voluntarily participate in the IRS CAP Program for the 2019 and 2020 tax years. Participation in the IRS CAP Program has enabled us to have minimal uncertain tax benefits associated with our federal tax return filings.