Income taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The Company is subject to federal and state income taxes and the Texas franchise tax. The Company had federal net operating loss carryforwards totaling $2.0 billion and state of Oklahoma net operating loss carryforwards totaling $34.7 million as of March 31, 2020, which will begin expiring in 2026 and 2032, respectively. As of March 31, 2020, the Company believes it is more likely than not that a portion of the net operating loss carryforwards are not fully realizable. The Company continues to consider new evidence, both positive and negative, in determining whether, based on the weight of that evidence, a valuation allowance is needed. Such consideration includes projected future cash flows from its oil, NGL and natural gas reserves (including the timing of those cash flows), the reversal of deferred tax liabilities recorded as of March 31, 2020, the Company's ability to capitalize intangible drilling costs, rather than expensing these costs in order to prevent an operating loss carryforward from expiring unused and future projections of Oklahoma sourced income. As of March 31, 2020, a total valuation allowance of $255.9 million has been recorded to offset the Company's federal and Oklahoma net deferred tax assets, resulting in a Texas net deferred tax liability of $4.9 million, which is included in "Other noncurrent liabilities" on the unaudited consolidated balance sheets.

With the passage of the Tax Cuts and Jobs Act of 2017, the Alternative Minimum Tax ("AMT") on corporations was appealed and a provision was added allowing corporations to offset future tax liabilities by the amount of AMT paid with an AMT credit carryforward. The Coronavirus Aid, Relief, and Economic Security Act, enacted March 27, 2020, modified the opportunity for corporations to receive the AMT carryover refunds by adding in a provision where the AMT credit carryforwards do not expire and are fully refundable with the filing of the Company's 2019 consolidated tax return. The Company paid AMT in 2017, creating an AMT credit carryforward in the amount of $4.1 million, of which $2.0 million was received in 2019. The remaining $2.1 million is included in "Accounts receivable, net" on the unaudited consolidated balance sheet as of March 31, 2020.