6. Income Taxes

The principal components of EOG's net deferred income tax liabilities at December 31, 2014 and 2013 were as follows (in thousands):



	2014			2013
Current Deferred Income Tax Assets (Liabilities)
Commodity Hedging Contracts	$	—		$	29,582
Deferred Compensation Plans	—			42,296
Net Operating Loss	—			96,616
Alternative Minimum Tax Credit Carryforward	—			72,297
Foreign Net Operating Loss	49,865			—
Foreign Valuation Allowance	(30,247		)	—
Other	—			3,815
Total Net Current Deferred Income Tax Assets	$	19,618		$	244,606
Noncurrent Deferred Income Tax Assets (Liabilities)
Foreign Oil and Gas Exploration and Development Costs Deducted for Tax Under Book Depreciation, Depletion and Amortization	$	(141,643	)	$	(112,346	)
Foreign Net Operating Loss	487,876			369,257
Foreign Valuation Allowances	(349,704		)	(183,122		)
Foreign Other	4,096			4,179
Total Net Noncurrent Deferred Income Tax Assets	$	625		$	77,968
Current Deferred Income Tax (Asset) Liabilities
Commodity Hedging Contracts	$	166,109		$	—
Deferred Compensation Plans	(48,207		)	—
Accrued Expenses and Liabilities	(5,643		)	—
Other	(1,516		)	—
Total Net Current Deferred Income Tax Liabilities	$	110,743		$	—
Noncurrent Deferred Income Tax (Assets) Liabilities
Oil and Gas Exploration and Development Costs Deducted for Tax Over Book Depreciation, Depletion and Amortization	$	7,634,297		$	6,287,541
Non-Producing Leasehold Costs	(44,236		)	(50,581		)
Seismic Costs Capitalized for Tax	(158,157		)	(136,964		)
Equity Awards	(127,541		)	(122,665		)
Capitalized Interest	97,739			101,006
Alternative Minimum Tax Credit Carryforward	(793,126		)	(557,352		)
Undistributed Foreign Earnings	249,861			—
Other	(35,891		)	1,369
Total Net Noncurrent Deferred Income Tax Liabilities	$	6,822,946		$	5,522,354
Total Net Deferred Income Tax Liabilities	$	6,913,446		$	5,199,780

The components of Income Before Income Taxes for the years indicated below were as follows (in thousands):



	2014			2013		2012

United States	$	5,161,232		$	3,268,727	$	1,988,105
Foreign	(165,917		)	168,159		(707,365		)
Total	$	4,995,315		$	3,436,886	$	1,280,740

The principal components of EOG's Income Tax Provision for the years indicated below were as follows (in thousands):



	2014		2013			2012
Current:
Federal	$	269,326	$	207,777		$	242,674
State	22,835		22,856			22,573
Foreign	82,721		134,379			152,276
Total	374,882		365,012			417,523
Deferred:
Federal	1,608,706		915,994			454,173
State	29,056		26,305			632
Foreign	67,184		(67,534		)	(161,867		)
Total	1,704,946		874,765			292,938
Income Tax Provision	$	2,079,828	$	1,239,777		$	710,461

The differences between taxes computed at the United States federal statutory tax rate and EOG's effective rate were as follows:



	2014		2013		2012

Statutory Federal Income Tax Rate	35.00	%	35.00	%	35.00	%
State Income Tax, Net of Federal Benefit	0.68		0.93		1.18
Income Tax Provision Related to Foreign Operations	(0.12	)	0.23		1.11
Canadian Divestiture	(3.46	)	—		—
Undistributed Foreign Earnings	4.94		—		—
Foreign Valuation Allowances	6.47		—		10.57
Foreign Oil and Gas Impairments	(1.90	)	—		6.90
Other	0.03		(0.09	)	0.71
Effective Income Tax Rate	41.64	%	36.07	%	55.47	%

The effective tax rate of 42% in 2014 was higher than the prior year rate of 36% primarily due to valuation allowances in the United Kingdom and taxes on undistributed foreign earnings in the United States.

Deferred tax assets are recorded for certain tax benefits, including tax net operating losses (NOLs) and tax credit carryforwards, provided that management assesses the utilization of such assets to be "more likely than not." Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2014, 2013 and 2012, cumulative valuation allowances of $463 million, $224 million and $200 million, respectively, have been recorded as EOG does not believe that certain foreign and state deferred tax assets are more likely than not to be realized. Once established, these valuation allowances are subsequently adjusted for current year taxable profits or losses and future taxable income estimates.

The balance of unrecognized tax benefits at December 31, 2014, was zero. When applicable, EOG records interest and penalties related to unrecognized tax benefits to its income tax provision. Currently, there are no amounts of interest or penalties recognized on the Consolidated Statements of Income and Comprehensive Income or on the Consolidated Balance Sheets. EOG does not anticipate that the amount of the unrecognized tax benefits will significantly change during the next twelve months. EOG and its subsidiaries file income tax returns in the United States and various state, local and foreign jurisdictions. EOG is generally no longer subject to income tax examinations by tax authorities in the United States (federal), Canada, the United Kingdom, Trinidad and China for taxable years before 2011, 2010, 2013, 2002 and 2008, respectively.

EOG's foreign subsidiaries' undistributed earnings of approximately $1.8 billion at December 31, 2014, are no longer considered to be permanently reinvested outside the United States and, accordingly, EOG recorded $250 million of United States federal and state deferred income taxes in 2014. EOG based its change in the permanent reinvestment assertion on a post-Canadian divestiture evaluation of its remaining foreign operations' capital requirements and projected foreign cash surpluses.

In 2014, EOG utilized a United States federal tax NOL of $940 million thereby fully exhausting the balance of federal tax NOLs carried forward from prior years. However, as of December 31, 2014, EOG still had state income tax NOLs being carried forward of approximately $1.6 billion, which, if unused, expire between 2015 and 2034. The Stock Compensation Topic of the ASC provides that when settlement of a stock award contributes to a NOL carryforward, neither the associated excess tax benefit nor the credit to Additional Paid in Capital (APIC) should be recorded until the stock award deduction reduces income taxes payable. Due to the current-year utilization of the available NOLs, a benefit of $29 million was reflected in APIC. In 2014, EOG paid alternative minimum tax (AMT) of $196 million. The AMT paid in 2014, along with AMT of $597 million paid in prior years, will be carried forward indefinitely as a credit available to offset regular income taxes in future periods.

The ability of EOG to utilize the AMT credit carryforwards to reduce federal income taxes may become subject to various limitations under the Internal Revenue Code. Such limitations may arise if certain ownership changes (as defined for income tax purposes) were to occur. As of December 31, 2014, management does not believe that an ownership change has occurred which would limit the carryforward.

During 2014, EOG's United Kingdom subsidiary incurred a tax NOL of approximately $246 million which, along with prior years' NOLs of $548 million, will be carried forward indefinitely. However, as a carryforward, the tax effect of these NOLs represent a future tax benefit (deferred tax asset) and must be evaluated for the likelihood of future utilization. Evaluations done in late 2014 indicate that not all of these NOLs may be utilized and therefore a valuation allowance was recorded in the fourth quarter of this year and is included in the aforementioned valuation allowance total.