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Income Taxes
6 Months Ended
Jun. 30, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company calculates the interim income tax provision using actual year to date financial results. The tax effect of unusual or infrequently occurring items, including effects of changes in tax laws or rates, are reported in the interim period in which they occur.
The Company records deferred tax assets to the extent these assets will more likely than not be realized. In making such determination, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial performance. Based upon the review of all positive and negative evidence, including its recent history of operating losses, the Company concluded that a full valuation allowance was necessary for net deferred tax assets at June 30, 2017 (Successor) and December 31, 2016 (Successor), exclusive of certain deferred tax liabilities that have an indefinite life.
Results of operations of the Predecessor have historically been included in the federal and state income tax returns of the Parent. Accordingly, the income tax provision included in the Predecessor financial statements was calculated using a method consistent with a separate return basis, as if the Predecessor had been a separate taxpayer. Similarly, historical tax attributes (net operating losses, alternative minimum tax credits, etc.) have been allocated to the Predecessor’s business utilizing a reasonable method of allocation.
 As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred income tax assets. As part of the Asset Acquisition, the Company succeeded to certain tax attributes and assumed the tax bases of the acquired assets and assumed liabilities. The tax attributes included net operating losses and alternative minimum tax and general business tax credits. As part of the evaluation of the acquired assets and assumed liabilities as of April 1, 2016, management determined that a valuation allowance was needed for deferred tax assets not expected to provide future tax benefits. If it is later determined that the Company will more likely than not realize all, or a portion, of the deferred tax assets, the Company will adjust the valuation allowance in a future period. Future recognized tax benefits in relation to the valuation allowance will result in a tax benefit in the period recognized.
The Company recognized income tax expense of $32.8 million and $34.7 million for the three and six months ended June 30, 2017 (Successor), respectively. The Company recognized no income tax expense for the three months ended June 30, 2016 (Successor) and recognized income tax expense of $18.0 thousand for the three months ended March 31, 2016 (Predecessor).
The Company continues to utilize a discrete period method to calculate taxes for the three and six months ended June 30, 2017, as it does not believe that the annual effective tax rate method would represent a reliable estimate given current circumstances. The effective tax rate for the three months ended June 30, 2017 of 20.1% is less than the statutory tax rate primarily as a result of changes in the valuation allowance and percentage depletion. The Company continues to maintain a significant valuation allowance against deferred tax asset positions due to our cumulative losses in recent years, which limit its ability to look to future taxable income in assessing the realizability of these assets. Additionally, the Company's utilization of available net operating losses ("NOL") is currently limited in the amount that can be used in any given year due to changes in ownership that occurred in connection with the Asset Acquisition for purposes of Internal Revenue Code ("IRC") Section 382. During the three months ended June 30, 2017 (Successor), the Company exceeded the estimated annual limit under IRC Section 382 for utilization of these available NOLs, which caused the increase in the effective tax rate from the three months ended June 30, 2016.