Provision (Benefit) for Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Provision (Benefit) for Income Taxes

Provision (Benefit) for Income Taxes

Income (Loss) before taxes is as follows (in thousands):

	Successor			Predecessor
	Period from April 23, 2016 through December 31, 2016			Period from January 1, 2016 through April 22, 2016		Year Ended December 31,
						2015			2014
Income (Loss) Before Income Taxes	$	(156,288	)	$	851,611	$	(1,734,514	)	$	(433,470	)

The following is an analysis of the consolidated income tax provision (benefit) (in thousands):

	Successor		Predecessor
	Period from April 23, 2016 through December 31, 2016		Period from January 1, 2016 through April 22, 2016		Year Ended December 31,
					2015			2014
Current	$	—	$	—	$	(410	)	$	314
Deferred	—		—		(80,133		)	(150,357		)
Total	$	—	$	—	$	(80,543	)	$	(150,043	)

Reconciliations of income taxes computed using the U.S. Federal statutory rate (35%) to the effective income tax rates are as follows (in thousands):

	Successor		Predecessor
	Period from April 23, 2016 through December 31, 2016		Period from January 1, 2016 through April 22, 2016		Year Ended December 31,
					2015		2014
Federal Statutory Rate	35.0	%	35.0	%	35.0	%	35.0	%
State tax provisions (benefits), net of federal benefits	0.9	%	0.9	%	1.0	%	1.4	%
Reorganization Adjustments	—	%	(1.8	)%	—	%	—	%
Expiration/Write-off of NOL Carryovers	(74.9	)%	—	%	—	%	(0.1	)%
Valuation allowance adjustments	38.9	%	(35.1	)%	(31.3	)%	(1.1	)%
Other, net	0.2	%	1.0	%	(0.1	)%	(0.7	)%
Effective rate	—	%	—	%	4.6	%	34.5	%

The tax effects of temporary differences representing the net deferred tax asset (liability) at December 31, 2016 and 2015 were as follows (in thousands):

	Successor			Predecessor
	Year Ended December 31, 2016			Year Ended December 31, 2015
Deferred tax assets:
Federal net operating loss (“NOL”) carryovers	$	40,104		$	287,720
NOLs for excess stock-based compensation	—			(9,571		)
Oil and gas exploration and development costs	71,292			214,413
State NOL carryovers	—			18,384
Alternative minimum tax credits	2,092			2,092
Other Carryover Items	1,107			1,215
Asset Retirement Obligations	11,447			22,884
Derivative Contracts	5,802			—
Unrealized share-based compensation	648			9,953
Valuation allowance	(136,656		)	(553,283		)
Other	4,164			6,193
Total deferred tax assets	$	—		$	—
Deferred tax liabilities:
Oil and gas exploration and development costs	$	—		$	—
Other	—			—
Total deferred tax liabilities	$	—		$	—
Net deferred tax liabilities	$	—		$	—
Net current deferred tax assets	—			—
Net non-current deferred tax liabilities	$	—		$	—

The Company has evaluated the full impact of the reorganization on our carryover tax attributes and believes it will not incur an immediate cash income tax liability as a result of emergence from bankruptcy. The Company will be able to fully absorb cancellation of debt income (CODI), estimated to be $854 million, with NOL carryforwards. The remaining NOL carryforward will be severely limited under Sec. 382 due to the change in control annual limitation of $5.8 million. The NOL carryforward that will expire before utilization due to the IRC Sec. 382 limitation is estimated to be $305 million. The deferred tax asset associated with the NOLs expected to expire was written off as of December 31, 2016. The remaining NOL carryforward after CODI and excess Sec. 382 limitation is $115 million, which will expire between 2034 and 2035 if not utilized in earlier periods. The Company’s state NOL carryforwards and deferred tax benefits for excess stock-based compensation deductions were written off as part of the reorganization.

The Company’s amortizable tax basis exceeded the book carrying value of its assets at December 31, 2016 and December 31, 2015, leaving the Company in a net deferred tax asset position. Management has determined that it is not more likely than not that the Company will realize future cash benefits from this additional tax basis and remaining carryover items and accordingly has recorded a full valuation allowance to offset its tax assets. The Company’s valuation allowance balance was $137 million and $553 million at December 31, 2016 and December 31, 2015, respectively.

As of December 31, 2016, we do not have any accrued liability for uncertain tax positions. We do not believe the total of unrecognized tax positions will significantly increase or decrease during the next 12 months.

The Company records interest and penalties related to potential underpayment of any unrecognized tax benefits as a component of income tax expense. The Company has not incurred any interest or penalties associated with unrecognized tax benefits.

Our U.S. federal and state income tax returns from 2015 forward are subject to examination. For years prior to 2015 our U.S federal and state returns are subject to examination to the extent of our net operating loss (NOL) carryforwards. There are no material unresolved items related to periods previously audited by these taxing authorities.