Income Taxes

The principal components of EOG's net deferred income tax liabilities at December 31, 2015 and 2014 were as follows (in thousands):



	2015			2014
Current Deferred Income Tax Assets (Liabilities)
Deferred Compensation Plans	$	38,559		$	—
Alternative Minimum Tax Credit Carryforward	93,316			—
Foreign Net Operating Loss	47,786			49,865
Foreign Valuation Allowance	(35,536		)	(30,247		)
Other	3,687			—
Total Net Current Deferred Income Tax Assets	$	147,812		$	19,618
Noncurrent Deferred Income Tax Assets (Liabilities)
Foreign Oil and Gas Exploration and Development Costs Deducted for Tax Under Book Depreciation, Depletion and Amortization	$	(57,569	)	$	(141,643	)
Foreign Net Operating Loss	443,010			487,876
Foreign Valuation Allowances	(380,104		)	(349,704		)
Foreign Other	1,506			4,096
Total Net Noncurrent Deferred Income Tax Assets	$	6,843		$	625
Current Deferred Income Tax (Asset) Liabilities
Commodity Hedging Contracts	$	—		$	166,109
Deferred Compensation Plans	—			(48,207		)
Accrued Expenses and Liabilities	—			(5,643		)
Other	—			(1,516		)
Total Net Current Deferred Income Tax Liabilities	$	—		$	110,743
Noncurrent Deferred Income Tax (Assets) Liabilities
Oil and Gas Exploration and Development Costs Deducted for Tax Over Book Depreciation, Depletion and Amortization	$	5,299,817		$	7,634,297
Non-Producing Leasehold Costs	(53,026		)	(44,236		)
Seismic Costs Capitalized for Tax	(162,240		)	(158,157		)
Equity Awards	(140,663		)	(127,541		)
Capitalized Interest	98,242			97,739
Alternative Minimum Tax Credit Carryforward	(685,189		)	(793,126		)
Undistributed Foreign Earnings	258,403			249,861
Other	(27,442		)	(35,891		)
Total Net Noncurrent Deferred Income Tax Liabilities	$	4,587,902		$	6,822,946
Total Net Deferred Income Tax Liabilities	$	4,433,247		$	6,913,446

The components of Income (Loss) Before Income Taxes for the years indicated below were as follows (in thousands):



	2015			2014			2013

United States	$	(6,840,119	)	$	5,161,232		$	3,268,727
Foreign	(81,437		)	(165,917		)	168,159
Total	$	(6,921,556	)	$	4,995,315		$	3,436,886

The principal components of EOG's Income Tax Provision (Benefit) for the years indicated below were as follows (in thousands):



	2015			2014		2013
Current:
Federal	$	21,719		$	269,326	$	207,777
State	9,404			22,835		22,856
Foreign	54,143			82,721		134,379
Total	85,266			374,882		365,012
Deferred:
Federal	(2,362,926		)	1,608,706		915,994
State	(127,444		)	29,056		26,305
Foreign	8,063			67,184		(67,534		)
Total	(2,482,307		)	1,704,946		874,765
Income Tax Provision (Benefit)	$	(2,397,041	)	$	2,079,828	$	1,239,777

The differences between taxes computed at the United States federal statutory tax rate and EOG's effective rate were as follows:



	2015		2014		2013

Statutory Federal Income Tax Rate	35.00	%	35.00	%	35.00	%
State Income Tax, Net of Federal Benefit	1.11		0.68		0.93
Income Tax Provision Related to Foreign Operations	(1.31	)	(0.12	)	0.23
Canadian Divestiture	—		(3.46	)	—
Undistributed Foreign Earnings	—		4.94		—
Foreign Valuation Allowances	—		6.47		—
Foreign Oil and Gas Impairments	—		(1.90	)	—
Other	(0.17	)	0.03		(0.09	)
Effective Income Tax Rate	34.63	%	41.64	%	36.07	%

The effective tax rate of 35% in 2015 was lower than the prior year rate of 42% primarily due to the effects of recording valuation allowances in the United Kingdom and deferred taxes in the United States on undistributed foreign earnings in 2014.

Deferred tax assets are recorded for certain tax benefits, including tax net operating losses (NOLs) and tax credit carryforwards, provided that management assesses the utilization of such assets to be "more likely than not." Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, EOG has recorded valuation allowances for the portion of certain foreign and state deferred tax assets that management does not believe are more likely than not to be realized.

The principal components of EOG's rollforward of valuation allowances for deferred tax assets were as follows (in thousands):



	2015			2014			2013

Beginning Balance	$	463,018		$	223,599		$	199,743
Increase ⁽¹⁾	146,602			392,729			43,422
Decrease ⁽²⁾	(4,315		)	(1,424		)	(4,967		)
Other ⁽³⁾	(99,178		)	(151,886		)	(14,599		)
Ending Balance	$	506,127		$	463,018		$	223,599


(1)	Increase in valuation allowance related to the generation of tax net operating losses and other deferred tax assets.


(2)	Decrease in valuation allowance associated with adjustments to certain deferred tax assets and their related allowance.


(3)	Represents dispositions/revisions/foreign exchange rate variances and the effect of statutory income tax rate changes.

The balance of unrecognized tax benefits at December 31, 2015, was zero. When applicable, EOG records interest and penalties related to unrecognized tax benefits to its income tax provision. Currently, there are no amounts of interest or penalties recognized on the Consolidated Statements of Income and Comprehensive Income or on the Consolidated Balance Sheets. EOG does not anticipate that the amount of the unrecognized tax benefits will significantly change during the next twelve months. EOG and its subsidiaries file income tax returns and are subject to tax audits in the United States and various state, local and foreign jurisdictions. EOG's earliest open tax years in its principal jurisdictions are as follows: United States federal (2011), Canada (2011), United Kingdom (2014), Trinidad (2002) and China (2008).

EOG's foreign subsidiaries' undistributed earnings of approximately $2 billion at December 31, 2015, are no longer considered to be permanently reinvested outside the United States and, accordingly, EOG has cumulatively recorded $258 million of United States federal and state deferred income taxes. EOG changed its permanent reinvestment assertion in 2014.

In 2015, EOG utilized alternative minimum tax (AMT) credits of $4 million. Additional AMT credits of $779 million, resulting from AMT paid in prior years, will be carried forward indefinitely until they are used to offset regular income taxes in future periods. The ability of EOG to utilize these AMT credit carryforwards to reduce federal income taxes may become subject to various limitations under the Internal Revenue Code. Such limitations may arise if certain ownership changes (as defined for income tax purposes) were to occur. As of December 31, 2015, management does not believe that an ownership change has occurred which would limit these carryforwards.

As of December 31, 2015, EOG had state income tax NOLs being carried forward of approximately $1.7 billion, which, if unused, expire between 2016 and 2034. During 2015, EOG's United Kingdom subsidiary incurred a tax NOL of approximately $153 million which, along with prior years' NOLs of $764 million, will be carried forward indefinitely. As described above, these NOLs have been evaluated for the likelihood of future utilization, and valuation allowances have been established for the portion of these deferred tax assets that do not meet the "more likely than not" threshold.

The Protecting Americans from Tax Hikes Act of 2015 (PATH) was enacted on December 18, 2015. PATH retroactively extended various temporary individual and business tax incentives for 2015 and in some instances extended certain incentives through 2019. Bonus tax depreciation, a favorable tax incentive for EOG, was extended from 2015 through 2019.