10. Income Taxes

The current and deferred components of income tax (benefit) expense are as follows:

	Year Ended December 31,
In thousands	2017			2016
	(Restated)			(Restated)
Current income tax expense
Federal	$	59		$	5,057
State		113			341
Total current income tax expense		172			5,398
Deferred tax (benefit) expense
Federal		(29,125	)		19,534
Foreign		—			270
State		(66	)		(216	)
Total deferred income tax (benefit) expense		(29,191	)		19,588
Total income tax (benefit) expense	$	(29,019	)	$	24,986

The following table provides a reconciliation of the Company’s actual income tax provision amounts from the expected income tax provision amount by applying the U.S. federal statutory corporate income tax rate of 35% for the periods indicated:

	Year Ended December 31,
In thousands	2017			2016
	(Restated)			(Restated)
Expected income tax benefit at statutory rate	$	(25,370	)	$	(25,800	)
Permanent differences		(357	)		511
Remeasurement of deferred balances due to federal rate change		(4,140	)		—
Net operating loss write down		—			49,608
State tax, tax effected		97			(20	)
Prior year differences		779			311
Other		(28	)		376
Actual income tax (benefit) provision	$	(29,019	)	$	24,986

The tax effects of the Company’s temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

	December 31,
In thousands	2017			2016
	(Restated)			(Restated)
Deferred tax assets:
Net operating loss carryforward	$	20,874		$	20,442
Stock based compensation		1,891			2,593
Intangibles		351			682
Organizational expenses and other		2,900			3,864
Total deferred tax assets	$	26,016		$	27,581
Deferred tax liabilities:
Oil and gas properties and other property and equipment, principally due to intangible drilling costs	$	(35,214	)	$	(62,712	)
Loss on derivative instruments		4,429			1,371
Other		—			(200	)
Net deferred tax liabilities	$	(4,769	)	$	(33,960	)

The net operating loss carryforward as of December 31, 2017, approximates $99.4 million and begins to expire in 2030.

On December 22, 2016, the Company completed a public offering of 13.8 million of its Class A common stock. A change of ownership, as defined under the provisions of Section 382 of the Internal Revenue Code (“IRC”) occurred on this date. A portion of our net operating loss and tax credit carryforwards will be limited in future periods. IRC Section 382 places limitations on the amount of taxable income which may be offset by tax carryforward attributes, such as net operating losses or tax credits after a change of ownership event. As a result of this ownership change, certain of our accumulated net operating losses will be subject to an annual limitation regarding their utilization against taxable income in future periods. The 2016 change creates an estimated annual utilization limit of approximately $1.0 million on our ability to utilize net operating losses generated prior to the ownership change event. Built-in gains associated with our deferred tax attributes on the date of the ownership change may increase the net operating loss utilization limit in future periods, allowing additional utilization of net operating losses generated prior to the date of the ownership change. Due to the ownership change and the resulting limitation on the utilization of net operating loss generated prior to the change, an estimated $141.7 million of the net operating loss carryforwards were written off in 2016. The Company has approximately $8.7 million of percentage depletion carryover which has no expiration.

On June 15, 2017, the Company entered into an amended and restated purchase agreement with Chambers Energy Capital III, LP (“Chambers”) where the Company closed transactions issuing Chambers 5,400 shares of Series A-1 Preferred Stock and 74,600 shares of Series A-2 Preferred Stock. These transactions created an additional change of ownership under the provision of Section 382 of the IRC. The 2017 change creates an additional estimated annual utilization limit of approximately $0.8 million on our ability to utilize net operating losses generated subsequent to the 2016 change in ownership, but prior to the June, 2017 change in ownership.

If the Company were to experience another ownership change in future periods, the net operating loss carryforwards may be subject to additional utilization limits

The Company files income tax returns in the United States federal jurisdiction and in various state jurisdictions. At December 31, 2017, there are no current examinations of federal or state jurisdictions in progress. The Company’s income tax returns related to fiscal years ended December 31, 2010 through 2017 remain open to possible examination by the tax authorities. The Company has not recorded any interest or penalties associated with uncertain tax positions.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Cuts and Jobs Act (the “Act”), the Company revalued its deferred tax assets and liabilities at December 31, 2017, which resulted in a $6.3 million benefit.

The corporate alternative minimum tax (“AMT”) for tax years beginning in January 1, 2018 has also been repealed. The Act provides that existing AMT credit carryovers are refundable beginning in 2018. As of December 31, 2017, the Company had AMT credit carryovers of $2.4 million that are expected to be fully refunded by 2022.

The deductibility of interest expense for tax years beginning in January 1, 2018 has been limited to 30% of earnings before interest, taxes, depreciation, and amortization for four years ending 2021. Deductibility of interest expense for tax years beginning in January 1, 2022 will then be limited to 30% of earnings before interest and taxes thereafter. The Company has not yet evaluated the impact of this provision.

The Act is a comprehensive bill containing other provisions, and the ultimate impact from the Act may differ from the Company’s estimates as of December 31, 2017 due to changes in the interpretations and assumptions made by the Company as well as additional regulatory guidance that may be issued.