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Income Tax
3 Months Ended
Mar. 31, 2017
Income Tax Disclosure [Abstract]  
Income Tax

Note 12—Income Tax

For the year ending December 31, 2017, the Company’s annual estimated effective tax rate is forecasted to be 0%, exclusive of discrete items. The Company recorded no income tax expense for the period due to a reduction of previously recorded valuation allowance in the amount of $9.2 million, which is net of a discrete item in the amount of $0.6 million related to an income tax for a share based compensation windfall settled in this period.  

The Company is forecasting positive pretax income for the year and as a result plans on reducing its valuation allowance to the extent the Company records pretax income cumulatively year to date in the quarter.  At this time, the Company does not believe that the weight of evidence allows the release of its valuation allowance (due to a preponderance of negative evidence as to future realizability) and accordingly reflect a current deferred tax benefit of zero.  The Company continues to evaluate the need for the valuation allowance based on current and expected earnings and other factors, and adjust it accordingly.  No current federal income taxes are anticipated to be paid in the next twelve months. For the three months ended March 31, 2017, the Company’s overall effective tax rate on operations was different than the federal statutory rate of 35% due primarily to the release of a valuation allowance recorded in a previous period.

The Internal Revenue Service recently completed its examination of Eclipse Resources Corporation for its tax year 2014.  There were no adjustments to the Company’s tax returns as a result of the examination.