Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

(4) Income Taxes

Our income tax expense was $229.2 million for the year ended December 31, 2023 compared to expense of $230.5 million in 2022 and a benefit of $9.7 million in 2021. The effective income tax rate is influenced by a variety of factors including geographic sources and relative magnitude of these sources of income. Reconciliation between the statutory federal income tax rate and our effective income tax rate is as follows:

	Year Ended December 31,
	2023				2022				2021
Federal statutory tax rate		21.0		%		21.0		%		21.0		%
State, net of federal benefit		(0.1	)			1.0				0.6
Equity compensation and executive compensation disallowance		(0.3	)			0.2				2.6
Valuation allowances		0.2				(5.5	)			(26.8	)
Permanent differences and other		—				(0.4	)			0.2
Consolidated effective tax rate		20.8		%		16.3		%		(2.4	)	%

Income tax expense (benefit) attributable to income before income taxes consists of the following (in thousands):

	Year Ended December 31,
	2023			2022			2021
Current
Federal	$	—		$	—		$	—
State		1,547			14,688			7,984
	$	1,547		$	14,688		$	7,984
Deferred
Federal	$	230,563		$	245,839		$	6,297
State		(2,909	)		(30,067	)		(24,024	)
		227,654			215,772			(17,727	)
Income tax expense (benefit)	$	229,201		$	230,460		$	(9,743	)

Significant components of deferred tax assets and liabilities are as follows (in thousands):

	December 31,
	2023			2022
Deferred tax assets:
Net operating loss carryforward	$	538,340		$	581,349
Divestiture contract obligation		107,067			105,227
Deferred compensation		17,342			25,733
Equity compensation		6,767			4,813
Asset retirement obligations		25,614			24,113
Interest expense carryforward		19,861			16,118
Lease right-of-use liabilities		6,023			19,395
Unrealized mark-to-market loss		—			30,307
Other		16,396			16,922
Valuation allowances:
Federal		(23,396	)		(21,320	)
State, net of federal benefit		(172,001	)		(171,423	)
Total deferred tax assets		542,013			631,234
Deferred tax liabilities:
Depreciation and depletion		(998,886	)		(935,710	)
Unrealized mark-to-market gain		(96,545	)		—
Lease right-of-use assets		(5,184	)		(18,440	)
Other		(2,686	)		(10,655	)
Total deferred tax liabilities		(1,103,301	)		(964,805	)
Net deferred tax liability	$	(561,288	)	$	(333,571	)

At December 31, 2023, deferred tax liabilities exceeded deferred tax assets by $561.3 million. As of December 31, 2023, we have a state valuation allowance of $172.0 million related to state tax attributes in Louisiana, Oklahoma, Pennsylvania, Texas and West Virginia. As of December 31, 2023, we have federal valuation allowances of $23.4 million primarily related to our federal basis differences. The net change in our deferred tax asset valuation allowances was an increase of $2.7 million for the year ended December 31, 2023 compared to a reduction in our valuation allowances of $78.3 million in 2022 and a reduction of $108.0 million in 2021. We continue to evaluate the realizability of our federal and state deferred tax assets.

At December 31, 2023, we had federal NOL carryforwards of $1.8 billion. This includes $157.5 million that expires in 2037 and also includes $1.7 billion of NOL carryforwards generated after 2017 that do not expire. We have state NOL carryforwards in Pennsylvania of $811.1 million that expire between 2031 and 2042 and in Louisiana, we have state NOL carryforwards of $1.6 billion that do not expire. We file a consolidated tax return in the United States federal jurisdiction. We file separate company state income tax returns in Louisiana and Pennsylvania and file consolidated or unitary state income tax returns in Oklahoma, Texas and West Virginia. We are subject to U.S. federal income tax examinations for the years 2020 and after and we are subject to various state tax examinations for years 2019 and after. We have not extended the statute of limitation period in any income tax jurisdiction. Our policy is to recognize interest related to income tax expense in interest expense and penalties in general and administrative expense. We do not have any material accrued interest or penalties related to tax amounts as of December 31, 2023 or December 31, 2022. Throughout 2023, 2022 and 2021, our unrecognized tax benefits were not material.

On July 12, 2022, the Commonwealth of Pennsylvania enacted legislation to reduce the corporate net income tax rate from 9.99% to 8.99% in 2023 and continues to reduce that rate by 0.5% per year beginning in 2024, with the rate becoming 4.99% in 2031 and each year thereafter.