Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of the Company's consolidated provision for income taxes from continuing operations are as follows:

	Year Ended December 31,
	2023		2022
	(In thousands)
Current income tax expense:
Federal	$	5,852	$	4,026
State	1,020		446
Total current income tax expense	$	6,872	$	4,472
Deferred income tax expense:
Federal	$	24,305	$	27,393
State	3,284		979
Total deferred income tax expense	$	27,589	$	28,372
Total income tax expense	$	34,461	$	32,844

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 is as follows:

	Year Ended December 31,
	2023		2022
	(In thousands)
Deferred tax assets
Non-cash gain on derivatives	$	—	$	3,563
Intangibles	163		182
Share-based compensation	772		421
Interest expense limitation	3,861		—
Accruals and other	1,123		484
Net operating loss	2,700		2,812
Total deferred tax assets	8,619		7,462
Oil and natural gas assets	(79,761)		(52,665)
Other fixed assets	(661)		(553)
Unrealized gain on derivatives	(1,542)		—
Total deferred tax liabilities	(81,964)		(53,218)
Net deferred tax liabilities	$	(73,345)	$	(45,756)

A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:

	Year Ended December 31,
	2023		2022
Tax at statutory rate	21.0	%	21.0	%
Nondeductible compensation	0.7	%	0.2	%
Share-based compensation	(0.5)	%	—	%
State income taxes, net of federal benefit	2.4	%	0.7	%
Other	—	%	(0.2)	%
Effective income tax rate	23.6	%	21.7	%

The Company's federal income tax returns for the years subsequent to December 31, 2019 remain subject to examination. The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2018. The Company currently believes that all other significant filing positions are highly certain and that all of its other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on the consolidated financial statements. Therefore, the Company has not established any significant reserves for uncertain tax positions.

Section 382 of the Internal Revenue Code limits the utilization of U.S. net operating loss ("NOL") carryforwards following a change in control. The Merger caused a stock ownership change for purposes of Section 382 which is subject to an approximate annual limit. The Company has federal NOLs subject to the annual Section 382 limit of $12.9 million of which $4.1 million will expire beginning in 2024 with the remaining $8.8 million of the NOLs not expiring. Additionally, the Company has no federal NOLs generated after the Merger that are not limited by Section 382 and are not subject to expiration. We believe it is more likely than not the tax benefit of these net operating losses will be fully realized, as such no valuation allowance has been recorded. The deferred tax assets for the net operating losses, along with the other deferred tax assets as shown in the table above, are presented net with deferred tax liabilities, which primarily consist of book and tax depreciation differences.