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 liabilities at December 31, 2016 and 2015 are as follows:



	2016			2015
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	76,213		$	106,992
Statutory depletion carryforwards	9,913			9,809
Asset retirement obligations and other	22,518			21,249
	108,644			138,050
Deferred tax liabilities:
Property and equipment	(178,714		)	(240,520		)
Net deferred tax liabilities	$	(70,070	)	$	(102,470	)

Components of net deferred tax liabilities:
Current assets	$	6,520		$	6,526
Non-current liabilities	(76,590		)	(108,996		)
Net deferred tax liabilities	$	(70,070	)	$	(102,470	)

For the years ended December 31, 2016, 2015 and 2014, effective income tax rates were different than the statutory federal income tax rates for the following reasons:



	2016			2015			2014
	(In thousands)
Income tax expense (benefit) at statutory rate of 35%	$	(112,867	)	$	(53,667	)	$	23,999
Tax depletion in excess of basis	(164		)	(282		)	(729		)
Revision of previous tax estimates	63			30			(155		)
State income tax expense (benefit), net of federal tax effect	857			(1,472		)	1,008
Permanent and other^(a)	81,784			252			564
Income tax expense (benefit)	$	(30,327	)	$	(55,139	)	$	24,687

Current	$	2,073		$	79		$	227
Deferred	(32,400		)	(55,218		)	24,460
Income tax expense (benefit)	$	(30,327	)	$	(55,139	)	$	24,687
______


(a)	Includes $80.5 million of permanent differences related to the change in fair value of common stock warrants in 2016.

We derive a tax deduction when options are exercised 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, 2016, our cumulative tax loss carryforwards were approximately $239.3 million, of which $22 million relates to excess tax benefits from exercise of stock options. The cumulative tax loss carryforwards are scheduled to expire if not utilized between 2027 and 2031.

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.

CWEI and its subsidiaries file federal income tax returns with the United States Internal Revenue Service and state income tax returns in various state tax jurisdictions. As a general rule, the Company’s tax returns for fiscal years after 2012 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, 2016 and 2015.