Income Taxes

6 Months Ended

Jun. 30, 2019

The Company’s effective income tax rate is calculated as the amount of income tax expense (benefit) divided by income from continuing operations before income taxes. For the three-month and six-month periods ended June 30, 2019 and 2018, the Company’s effective income tax rates were as follows:



	2019	2018
Three months ended June 30,	8.4%	(11.6)%
Six months ended June 30,	14.1%	249.9%

The effective tax rate for the three-month period ended June 30, 2019 was below the U.S. statutory tax rate of 21% due to an enacted future change in the Alberta provincial corporate income tax rate in Canada that reduced the future deferred tax liability by $13.0 million and no tax applied to the pre-tax income of the noncontrolling interest in MP Gulf of Mexico, LLC (MP GOM).

The effective tax rate for the three-month period ended June 30, 2018 was below the statutory tax rate primarily due to net losses and exploration expenses in certain foreign jurisdictions for which no income tax benefits will be realized, and income generated in foreign jurisdictions which have income tax rates higher than the U.S. statutory tax rate. As a result of a reported pretax loss, these items lowered the effective tax rate.

The effective tax rate for the six-month period ended June 30, 2019 was below the U.S. statutory tax rate of 21% due to an enacted future change in the Alberta provincial corporate income tax rate in Canada that reduced the future deferred tax liability by $13.0 million and no tax applied to the pre-tax income of the noncontrolling interest in MP GOM.

For the six-month period ended June 30, 2018 the effective tax rate is higher than the statutory tax rate of 21% because the Company reported a pre-tax loss and a tax benefit resulting from a favorable tax adjustment related to the 2017 Tax Act. The IRS’s April 2, 2018 guidance allowed for the preservation of 2017 operating loss carryforwards under the 2017 Tax Act’s taxation of unrepatriated foreign earnings. The preservation of the tax loss carryforward reduced the deferred tax expense by $156 million and resulted in a $36 million charge to taxes payable for a net $120 million tax benefit.

The Company’s tax returns in multiple jurisdictions are subject to audit by taxing authorities. These audits often take multiple years to complete and settle. Although the Company believes that recorded liabilities for unsettled issues are adequate, additional gains or losses could occur in future years from resolution of outstanding unsettled matters. As of June 30, 2019, the earliest years remaining open for audit and/or settlement in our major taxing jurisdictions are as follows: United States – 2015; Canada – 2013; Malaysia – 2012; and United Kingdom – 2017.