Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

INCOME TAXES

Note 12 - Income Taxes

The provision for income taxes consists of the following:

	Year Ended
	December 31,
(in thousands)	2019			2018
Current income tax benefit	$	-		$	-
Deferred income tax expense (benefit)		895			(590	)
Change in valuation allowance		(895	)		590
Total income tax benefit	$	-		$	-

The effective income tax rate for the years ended December 31, 2019 and 2018 differed from the statutory U.S. federal income tax rate as follows:

	Year Ended
	December 31,
	2019			2018
Federal income tax rate		21.0	%		21.0	%
State income taxes, net of federal benefit		4.9			4.9
Permanent differences		(3.3	)		(1.2	)
Non-controlling interest in consolidated partnerships		(46.2	)		(11.4	)
True-up of prior year depletion in excess of basis		(6.5	)		1.3
Stock-based compensation deficiency		(16.0	)		1.1
Purchase accounting adjustments		(45.0	)		(22.9	)
Rate changes of prior year deferred		1.8			(0.5	)
True-up of prior year deferred		-			3.0
Decrease in valuation allowance and other		89.3			4.7
Total effective income tax rate		-	%		-	%

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities are presented below:

(in thousands)	As of December 31,
	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	6,232		$	7,573
Depletion carryforwards		2,569			2,166
Accrual and other		3,997			1,372
Stock-based compensation		469			445
Asset retirement obligations		4,659			4,567
Property and equipment		(2,253	)		(42	)
Total deferred tax assets		15,673			16,081
Deferred tax liabilities:
Interest in partnerships		(338	)		(512	)
ASC 842 Operating Leases		(12	)		-
Derivative and other		(1,689	)		(1,008	)
Less valuation allowance		(13,634	)		(14,561	)
Net deferred tax asset	$	-		$	-

The Company has net operating losses ("NOL") of approximately $21.6 million available to reduce future years' federal taxable income. The federal net operating losses expire beginning in 2031 through 2037, while the current 2018 and 2019 net operating losses will never expire. The Company has various state NOL carryforwards available to reduce future years' state taxable income, which are dependent on apportionment percentages and state laws that can change from year to year and impact the amount of such carryforwards. These state NOL will expire beginning in 2023 through 2039 depending upon each jurisdiction's specific law surrounding NOL carryforwards. Tax returns are subject to audit by various taxation authorities. The results of any audits will be accounted for in the period in which they are determined

The Company believes that the tax positions taken in the Company's tax returns satisfy the more likely than not threshold for benefit recognition. Accordingly, no liabilities have been recorded by the Company. Any potential adjustments for uncertain tax positions would be a reclassification between the deferred tax asset related to the Company's NOL and another deferred tax asset.

The Company's policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2019 and 2018, the Company did not have any uncertain tax positions.