Note 11 - Income Taxes

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

11. INCOME TAXES

The components of the income tax provision for the years ended  December 31, 2023 and 2022 include the following:

	2023			2022
	(in thousands)
Current:
Federal	$	-		$	-
State		(9	)		28
Total current income tax	$	(9	)	$	28
Deferred:
Federal	$	(351	)	$	(1,765	)
State		(531	)		(156	)
Total deferred income taxes	$	(882	)	$	(1,921	)
Total income tax benefit	$	(891	)	$	(1,893	)

Income tax benefit using the Company’s effective income tax rate differs from the U.S. federal statutory income tax rate due to the following:

	2023			2022
	(in thousands)
Income tax benefit at federal statutory rate (21%)	$	(6,982	)	$	(600	)
State income tax benefit, net of federal benefit		(541	)		(95	)
Prior year true up		-			(509	)
Compensation		224			187
Acquisition		-			1,056
Other		(284	)		-
Change in valuation allowance		6,692			(1,932	)
Income tax benefit	$	(891	)	$	(1,893	)

The components of deferred tax assets and liabilities as of December 31, 2023 and 2022 are as follows:

	2023			2022
	(in thousands)
Deferred tax assets:
Net operating loss carryover	$	9,012		$	8,443
Property and equipment		1,244			-
Percentage depletion and contribution carryovers		1,987			2,004
Deferred compensation liability		150			256
Asset retirement obligations		4,220			3,581
Stock-based compensation		428			439
Lease obligations		179			224
Derivatives		-			390
Other		212			249
Total deferred tax assets		17,432			15,586
Deferred tax liabilities:
Property and equipment		-			(6,107	)
Derivatives		(421	)		-
Lease assets		(156	)		(198	)
Total deferred tax liabilities		(577	)		(6,305	)
Net deferred tax assets		16,855			9,281
Less valuation allowance		(16,871	)		(10,179	)
Net deferred tax liability	$	(16	)	$	(898	)

As of December 31, 2023, the Company has approximately $24.7 million in net operating loss carryovers for federal income tax purposes. The net operating losses incurred prior to January 5, 2022 are subject to an Internal Revenue Code (IRC) Section 382 limitation as a result of a change of control incurred in conjunction with the transaction that closed on that day.

IRC. Section 382 limits the Company’s ability to utilize certain tax attributes to offset taxable income in future years. Due to the existence of a net unrealizable built in loss (“NUBIL”), assets at the time of the 2017 change in control, the Company also has realized built in losses (“RBIL”) that exceed the annual limitation. As of December 31, 2023, the Company has approximately $10.6 million of RBIL carryovers, which carry forward indefinitely subject to the annual limitation.

The Company recognizes, measures, and discloses uncertain tax positions whereby tax positions must meet a “more-likely-than-not” threshold to be recognized. During the years ended December 31, 2023 and 2022, no adjustments were recognized for uncertain tax positions.

The Company files income tax returns in U.S. federal and multiple state jurisdictions. The Company is subject to tax audits in these jurisdictions until the applicable statute of limitations expires. With certain exceptions, the Company is no longer subject to U.S. federal tax examinations for tax years prior to 2020. The Company is open for various state tax examinations for tax years 2019 and later. The Company’s policy is to recognize potential interest and penalties accrued related to uncertain tax positions within income tax expense. For the years ended December 31, 2023 and 2022, the Company did not recognize any interest or penalties in its Consolidated Statements of Operations, nor did it have any interest or penalties accrued in its Consolidated Balance Sheets at  December 31, 2023 and 2022 related to uncertain tax positions.