NOTE

– INCOME TAXES

Income tax expense consisted of the following:

	Year Ended December 31,
(In thousands)	2018			2017		2016
Current taxes:
Federal	$	—		$	—	$	—
State		4			—		—
Current taxes		4			—		—
Deferred taxes:
Federal		(111	)		—		—
State		220			—		—
Deferred taxes		109			—		—
Provision for income taxes, net	$	113		$	—	$	—

The items accounting for differences between income taxes computed at the federal statutory rate and the provision recorded for income taxes are as follows:

	Year Ended December 31,
(In thousands)	2018			2017			2016
Income taxes computed at the federal statutory rate	$	5,289		$	(5,242	)	$	(2,555	)
Effect of:
(Income) loss taxed as partnership		—			(552	)		2,555
State taxes, net of federal benefits		970			(610	)		—
Percentage depletion		(1,033	)		—			—
Changes in tax status		—			(205	)		—
Change in valuation allowance		(4,464	)		4,464			—
Change in enacted tax rates		—			2,119			—
Other, net		(649	)		26			—
Total	$	113		$	—		$	—

Deferred tax assets and liabilities are as follows:

	December 31,
(In thousands)	2018			2017
Deferred tax assets:
Loss carryforwards U.S. - Federal/States	$	17,073		$	13,500
Asset retirement obligations		3,306			3,178
Accrued expenses		521			—
Equity-based compensation		1,393			803
Other		4			—
Total deferred tax assets		22,297			17,481
Less valuation allowance		—			(4,464	)
Deferred tax assets, net		22,297			13,017

Deferred tax liabilities:
Depreciation & amortization		(22,406	)		(13,017	)
Net deferred tax liabilities, net of valuation allowance	$	(109	)	$	—

As of

December

31,

2018,

our federal and state net operating loss carryforwards for income tax purposes were approximately

$70

million. If

not

utilized, the federal and state net operating loss carryforwards of approximately

$60

million will expire between

2035

and

2037.

The remaining net operating loss carryforwards have

statutory expiration.

A valuation allowance was established against our net deferred tax assets in

2017

given our limited operating history. We now expect that our deferred tax assets will be realized based on our attainment of regular operations. As such, the valuation allowance was reversed in

2018.

Tax Cuts and Jobs Act

December 22, 2017,

the U.S. Government enacted comprehensive tax legislation referred to as the Tax Cuts and Jobs Act (the “Act”). The Act makes broad and complex changes to the U.S. tax code, including but

not

limited to, reducing the U.S. federal corporate rate from

35%

21%,

allowing full expensing of qualified property acquired and placed in service after

September 27, 2017

and imposing new limits on the deduction of net operating losses, executive compensation and net interest expense. There was

impact of the Act on our

2017

financial statements.