Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:



	Years Ended December 31,
	2015		2016		2017
	(In thousands)
Deferred tax liabilities:
Hedge contracts	$	9,578	$	—	$	—
Assets held for sale	—		3,390		—
Other	4,042		4,431		2,834
Total deferred tax liabilities	13,620		7,821		2,834
Deferred tax assets:



U.S. full cost pool	35,689			48,436			20,011
Capital loss carryforward	7,767			7,361			3,015
Depletion carryforward	5,558			5,216			3,174
U.S. net operating loss carryforward	67,531			80,670			53,545
Alternative minimum tax credit	757			757			757
Hedge contracts	—			3,135			2,777
Total deferred tax assets	117,302			145,575			83,279
Valuation allowance for deferred tax assets	(103,682		)	(137,754		)	(80,445		)
Net deferred tax assets	13,620			7,821			2,834
Net deferred tax	$	—		$	—		$	—

Significant components of the provision (benefit) for income taxes are as follows:



	Years ended December 31,
	2015			2016		2017
	(In thousands)
Current:
Federal	$	(242	)	$	—	$	—
State	(37		)	—		—
	$	(279	)	$	—	$	—
Deferred:
Federal	$	—		$	—	$	—
	$	—		$	—	$	—

At December 31, 2017, the Company had, $255.0 million of NOLs for U.S. tax purposes. Our pre-2018 NOL's will expire in varying amounts from 2023 through 2037, if not utilized; can offset 100% of future taxable income for regular tax purposes. Any NOLs arising after January 1, 2018, can generally be carried forward indefinitely and can offset up to 80% of future taxable income for regular tax purposes, (the alternative minimum tax no longer applies to corporations after January 1, 2018).

The use of our NOLs will be limited if there is an "ownership change" in our common stock, generally a cumulative ownership change exceeding 50% during a three year period, as determined under Section 382 of the Internal Revenue Code. As of December 31, 2017, we have not had an ownership change as defined by Section 382. Given historical losses, uncertainties exist as to the future utilization of the NOL carryforwards, therefore, the Company has established a valuation allowance of $103.7 million at December 31, 2015, $137.8 million at December 31, 2016 and $80.4 million at December 31, 2017.

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is:



	Years ended December 31,
	2015			2016			2017
	(In thousands)
Tax (expense) benefit at U.S. statutory rates	$	44,586		$	33,732		$	(5,602	)
(Increase) decrease in deferred tax asset valuation allowance	(43,596		)	(34,072		)	57,309
Accrual of prior year federal taxes (2009 and 2013)	37			—			—
Permanent differences	(1,371		)	(1,133		)	(1,134		)
Return to provision estimate revision	—			1,473			2,494
Change in deferred tax rate	—			—			(53,125		)
Other	55			—			58
	$	279		$	—		$	—

As of December 31, 2015, 2016 and 2017, the Company did not have any accrued interest or penalties related to uncertain tax positions. The tax years 2013 through 2017 remain open to examination by the tax jurisdictions to which the Company is subject.

New tax legislation, commonly referred to as the Tax Cuts and Jobs Act (H.R. 1), was enacted on December 22, 2017. ASC740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017. Since our federal deferred tax asset was fully offset by a valuation allowance, the reduction in the U.S. corporate income tax rate to 21% did not materially affect the Company's financial statements. Significant provisions that are not yet effective but may impact income taxes in future years include: the repeal of the corporate Alternative Minimum Tax, the limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income for levered balance sheets, a limitation on utilization of net operating losses generated after tax year 2017 to 80% of taxable income, the unlimited carryforward of net operating losses generated after tax year 2017, temporary 100% expensing of certain business assets, additional limitations on certain general and administrative expenses, and changes in determining the excessive compensation limitation. Currently, we do not anticipate paying cash federal income taxes in the near term due to any of the legislative changes, primarily due to the availability of our net operating loss carryforwards. Future interpretations relating to the recently enacted U.S. federal income tax legislation which vary from our current interpretation and possible changes to state tax laws in response to the recently enacted federal legislation may have a significant effect on this projection.