Income Taxes

Deferred tax assets and liabilities are the result of temporary differences between the consolidated financial statement carrying values and the tax basis of assets and liabilities. Significant components of net deferred tax assets (liabilities) at December 31, 2012 and 2011 are as follows:



	2012			2011
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	122,393		$	54,124
Fair value of derivatives	—			1,958
Statutory depletion carryforwards	8,159			7,359
Asset retirement obligations and other	21,814			21,165
	152,366			84,606
Deferred tax liabilities:
Fair value of derivatives	(4,208		)	—
Property and equipment	(295,428		)	(209,867		)
	(299,636		)	(209,867		)
Net deferred tax liabilities	$	(147,270	)	$	(125,261	)

Components of net deferred tax liabilities:
Current assets	$	8,560		$	8,948
Non-current liabilities	(155,830		)	(134,209		)
Net deferred tax liabilities	$	(147,270	)	$	(125,261	)

For the years ended December 31, 2012, 2011 and 2010, effective income tax rates were different than the statutory federal income tax rates for the following reasons:



	2012			2011			2010
	(In thousands)
Income tax expense at statutory rate of 35%	$	19,989		$	50,921		$	20,150
Tax depletion in excess of basis	(581		)	(425		)	(490		)
Revision of previous tax estimates	700			217			8
State income taxes, net of federal tax effect	1,513			1,310			884
Other	387			119			82
Income tax expense	$	22,008		$	52,142		$	20,634
Current	$	—		$	(408	)	$	375
Deferred	22,008			52,550			20,259
Income tax expense	$	22,008		$	52,142		$	20,634

We derive a tax deduction when employees and directors exercise options granted under our stock option plans. To the extent these tax deductions are used to reduce currently payable taxes in any period, we record a tax benefit for the excess of the tax deduction over cumulative book compensation expense as additional paid-in capital and as a financing cash flow in the accompanying consolidated financial statements. At December 31, 2012, our cumulative tax loss carryforwards were approximately $371.1 million, of which $21.8 million relates to excess tax benefits from exercise of stock options. The cumulative tax loss carryforwards are scheduled to expire if not utilized between 2023 and 2027.

In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. If it is more likely than not that some portion or all of the assets will not be realized, the assets are reduced by a valuation allowance. Based on our analysis of future taxable income, no valuation allowance is required.

The Company and its subsidiaries file federal income tax returns with the United States Internal Revenue Service (“IRS”) and state income tax returns in various state tax jurisdictions. As a general rule, the Company’s tax returns for fiscal years after 2008 currently remain subject to examination by appropriate taxing authorities. None of our income tax returns are under examination at this time. We do not have any uncertain tax positions as of December 31, 2012 and 2011.