INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Income From Continuing Operations Before Income Taxes and Equity in Income (Losses) of Investees

Income from continuing operations, before income taxes and equity in income (losses) of investees consisted of:

	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
U.S.	$	(283,242	)	$	(32,797	)	$	(3,715	)
Non-U.S. (foreign)		76,248		$	39,567		$	34,497
	$	(206,994	)	$	6,770		$	30,782

Components of Income Tax Provision (Benefit)

The components of income tax provision (benefit) are as follows:

	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
Current:
State	$	(768	)	$	135		$	115
Foreign		8,595			10,339			10,926
	$	7,827		$	10,474		$	11,041
Deferred:
Federal		(23,903	)		38,566			(15,863	)
State		(44	)		(2,099	)		1,062
Foreign		12,620			1,594			2,662
		(11,327	)		38,061			(12,139	)
	$	(3,500	)	$	48,535		$	(1,098	)

Significant Components of Deferred Income Tax Expense (Benefit)

The significant components of the deferred income tax expense (benefit) are as follows:

	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
Deferred tax expense (exclusive of the effect of other components listed below)	$	23,802		$	4,045		$	16,047
Write-off of power plants		(90,720	)		—			—
Usage (benefit) of operating loss carryforwards — U.S.		26,907			(35,575	)		(45,540	)
Change in valuation allowance		10,286			61,500			433
Change in foreign income tax		8,257			5,041			9,008
Change in lease transaction		1,170			1,027			769
Change in tax monetization transaction		5,353			(4,975	)		8,690
Change in intangible drilling costs		14,133			18,592			12,497
Benefit of production tax credits and alternative minimum tax credits		(10,515	)		(11,594	)		(14,043	)
Total	$	(11,327	)	$	38,061		$	(12,139	)

Difference Between US Federal Statutory Tax Rate And Company's Effective Tax Rate

The difference between the U.S. federal statutory tax rate and the Company’s effective tax rate are as follows:

	Year Ended December 31,
	2012			2011			2010
U.S. federal statutory tax rate		35.0	%		35.0	%		35.0	%
Valuation allowance		(5.0	)		908.5			—
State income tax, net of federal benefit		4.1			(22.9	)		3.2
Effect of foreign income tax, net		2.7			(28.3	)		4.5
Production tax credits		5.1			(171.3	)		(45.7	)
Dividends from foreign subsidiaries		(40.2	)		—			—
Depletion		0.3			(12.0	)		—
Other, net		(0.3	)		7.9			(0.7	)
Effective tax rate		1.7	%		716.9	%		(3.7	)%

Net Deferred Tax Assets and Liabilities

The net deferred tax assets and liabilities consist of the following:

	December 31,
	2012			2011
	(Dollars in thousands)
Deferred tax assets (liabilities):
Net foreign deferred taxes, primarily depreciation	$	(43,531	)	$	(35,274	)
Depreciation		44,701			(82,847	)
Intangible drilling costs		(66,881	)		(52,748	)
Net operating loss carryforward — U.S.		103,771			130,678
Dividends from foreign subsidiaries		(20,995	)		—
Tax monetization transaction		(26,470	)		(21,117	)
Lease transaction		3,410			4,582
Investment tax credits		1,971			1,971
Production tax credits		68,954			59,849
Alternative minimum tax credit		1,410			—
Stock options amortization		3,072			2,934
Accrued liabilities and other		653			649
		70,065			8,677
Less — valuation allowance		(80,890	)		(61,500	)
Total	$	(10,825	)	$	(52,823	)

Reconciliation Of Beginning And Ending Valuation Allowance

The following table presents a reconciliation of the beginning and ending valuation allowance:

	Year Ended December 31,
	2012		2011		2010
	(Dollars in thousands)
Balance at beginning of the year	$	61,500	$	433	$	—
Additions to deferred income tax expense		19,390		61,067		433
Balance at end of the year	$	80,890	$	61,500	$	433

Balance Sheet Presentation of Deferred Taxes

The following table presents the deferred taxes on the balance sheets as of the dates indicated:

	December 31
	2012			2011
	(Dollars in thousands)
Current deferred tax assets	$	637		$	1,842
Current deferred tax liabilities		(20,392	)		—
Non-current deferred tax assets		53,989			—
Non-current deferred tax liabilities		(45,059	)		(54,665	)
	$	(10,825	)	$	(52,823	)

Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	Year Ended December 31,
	2012		2011			2010
	(Dollars in thousands)
Balance at beginning of year	$	5,875	$	5,431		$	4,931
Additions based on tax positions taken in prior years		1,381		1,207			823
Additions based on tax positions taken in the current year		25		612			260
Reduction based on tax positions taken in prior years		—		(1,375	)		(583	)
Balance at end of year	$	7,281	$	5,875		$	5,431

Foreign Subsidiaries Income Tax Years Open to Examination

The Company’s foreign subsidiaries remain open to examination by the local income tax authorities in the following countries for the years indicated:

Israel	2009 — 2012
Nicaragua	2009 — 2012
Kenya	2000 — 2012
Guatemala	2008 — 2012
Philippines	2008 — 2012
New Zealand	2008 — 2012