NOTE 12. INCOME TAXES

The provision for income taxes is comprised of the following for the years ended December 31:

	2016		2015		2014
Current taxes:
U.S.	$	—	$	—	$	—
Foreign		—		—		—
Deferred taxes:
U.S		—		—		—
Foreign		—		—		—
Total	$	—	$	—	$	—

As we establish full valuation allowances against net deferred tax assets where we have determined that it is more likely than not that all of the deferred tax assets will not be realized, we have recognized no income taxes in our consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014.

The geographic sources of our loss are as follows for the years ended December 31:

	2016			2015			2014
U.S.	$	(2,313,482	)	$	(490,190	)	$	(307,025	)
Foreign		(29,827	)		(204,236	)		(203,738	)
Net loss	$	(2,343,309	)	$	(694,426	)	$	(510,763	)

The effective tax rate on our loss differs from the U.S. statutory rate as follows for the years ended December 31:

	2016			2015			2014
Income tax expense (benefit) at the federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		0.1	%		0.1	%		0.2	%
Foreign income tax		41.5	%		13.5	%		21.8	%
Other		(4.0	)%		(0.5	)%		(1.8	)%
Valuation allowance		(72.6	)%		(48.1	)%		(55.2	)%
		—	%		—	%		—	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of our temporary differences and net operating losses (“NOL”) are as follows at December 31:

	2016			2015
Long-term deferred tax asset:
Seismic and exploration costs	$	2,227,489		$	733,183
Stock based compensation		27,342			26,995
Domestic NOL carry forwards		695,434			568,050
Foreign NOL carry forwards		43,969			42,625
Other		11,522			(88,837	)
Valuation allowance		(2,597,708	)		(896,355	)
Total long-term deferred tax asset		408,048			385,661
Long-term deferred tax liability:
2019 Notes		(61,944	)		(85,339	)
2024 Notes		(107,629	)		(148,279	)
Oil and natural gas properties		(238,475	)		(152,043	)
Total long-term deferred tax liability		(408,048	)		(385,661	)

Net long-term deferred tax asset	$	—		$	—

As of December 31, 2016, we had NOL carryforwards for federal and state income tax purposes of approximately $2.0 billion and $82.8 million, respectively, which begin to expire in 2026 and 2025, respectively.

As of December 31, 2016, we had an NOL carryforward for foreign income tax purposes of approximately $85.6 million which began to expire in 2016.

The utilization of the NOL carryforwards is dependent upon generating sufficient future taxable income in the appropriate jurisdictions within the carryforward period.

Our tax filings are subject to examination by federal and state tax authorities where we conduct our business. These examinations may result in assessments of additional tax that are resolved with the authorities or through the courts. We have evaluated whether any material tax position we have taken will more likely than not be sustained upon examination by the appropriate taxing authority. As we believe that all such material tax positions we have taken are supportable by existing laws and related interpretations, we believe there are no material uncertain tax positions to consider. There were no unrecognized tax benefits or accrued interest or penalties associated with unrecognized tax benefits as of December 31, 2016 and 2015.