Income taxes

Income tax expense consists of the following for the years ended December 31:



	2013			2012			2011
Current tax expense
Federal tax benefit	$	(29	)	$	(23	)	$	(21	)
State tax expense	1,144			141			200
Current tax expense	1,115			118			179
Deferred tax expense
Federal tax expense	30,327			35,579			27,290
State tax expense	1,407			2,140			8,455
Deferred tax expense	31,734			37,719			35,745
	$	32,849		$	37,837		$	35,924

Income tax expense differed from amounts computed by applying the U.S. Federal income tax rate as follows for the years ended December 31:



	2013		2012		2011
Statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	3.8	%	2.1	%	3.6	%
Statutory depletion	(0.7	)%	(0.04	)%	(0.5	)%
Valuation allowance	(1.7	)%	—	%	7.3	%
Other	0.7	%	(0.04	)%	0.7	%
Effective tax rate	37.1	%	37.0	%	46.1	%

Components of the deferred tax assets and liabilities are as follows at December 31:



	2013			2012
Deferred tax assets related to
Asset retirement obligations	$	8,777		$	8,496
Accrued expenses, allowance and other	14,508			10,129
Derivative instruments	129			—
Net operating loss carryforwards
Federal	124,855			153,709
State	13,350			16,339
Statutory depletion carryforwards	2,867			2,242
Alternative minimum tax credit carryforwards	308			308
	164,794			191,223
Less valuation allowance	(10,385		)	(11,858		)
Deferred tax asset	154,409			179,365
Deferred tax liabilities related to
Derivative instruments	—			(32,438		)
Property and equipment	(206,799		)	(181,489		)
Inventories	(1,205		)	(1,211		)
Deferred tax liability	(208,004		)	(215,138		)
Net deferred tax liability	(53,595		)	(35,773		)
Less net current deferred tax asset (liability)	9,260			(26,872		)
Long-term deferred tax liability	$	(62,855	)	$	(8,901	)

Approximately $2,252 and $(33,066) of the current deferred tax asset (liability) at December 31, 2013 and 2012, respectively, relates to our short-term derivative instruments. Additionally, the current deferred tax asset (liability) includes an asset of approximately $656 and $1,015 related to asset retirement obligations at December 31, 2013 and 2012, respectively. At December 31, 2013 and 2012, taxes receivable of $434 and $245, respectively, are included in accounts receivable.

We have federal net operating loss carryforwards of approximately $357,000 at December 31, 2013, which will expire between 2027 and 2033 if unused. At December 31, 2013, we have state net operating loss carryforwards of approximately $335,000, which will expire between 2014 and 2031 if unused. In addition, at December 31, 2013 we had federal percentage depletion carryforwards of approximately $8,000, which are not subject to expiration.

At December 31, 2013, approximately $262,000 of the state net operating loss carryforwards have been reduced by a valuation allowance based on our assessment that it is more likely than not that a portion will not be realized. The decrease in the valuation allowance on the deferred tax asset of $1,473 during the year ended December 31, 2013 relates to utilization of our estimated state net operating loss carryforwards on the 2012 tax return and to adjustments to our expected realization of such carryforwards.

Realization of our deferred tax assets is dependent upon generating sufficient future taxable income. Although realization is not assured, we believe it is more likely than not that our deferred tax assets will be realized. The amount of our deferred tax assets considered realizable, however, could be reduced in the near-term if estimates of future taxable income are reduced.