The provision for income taxes differs from the amount obtained by applying the applicable Federal income tax rate of 21% at year-ends 2020 and 2019 to income before income taxes. The difference relates to the following items:

	2020			2019
Statutory tax rate	21%			21%

Expected tax benefit	$	(1,232,000	)	$	(380,000	)
Nondeductible expenses		—			—
Increase in valuation allowance		1,232,000			380,000

Tax provision (benefit) as reported	$	—		$	—

The components of deferred income taxes at December 31, are as follows:

	2020			2019

Deferred tax assets:
Loss carry-forwards	$	4,071,054		$	2,594,008
Depreciation, depletion and impairment		2,696,706			413,835
Unrecognized losses on derivatives		1 ,207			46,963

Total deferred tax assets		6,768,967			3,054,806

Valuation allowance		(6,768,967	)		(3,054,806	)

Net deferred taxes	$	—		$	—

At December 31, 2020, the Company has accumulated net operating loss carryforwards totaling approximately $19.4 million which begin to expire if not utilized starting in 2021.

Utilization of the Company's loss carryforwards is dependent on realizing taxable income. The Company recorded a valuation allowance as of December 31, 2020 and 2019 due to uncertainty related to its ability to utilize some of its deferred income tax assets, primarily consisting of net operating loss carryforwards before they expire.

The Company is no longer subject to income tax examinations by tax authorities for years before 2017. The Company is not currently the subject of any income tax examinations by any tax authorities.

Based upon a review of its income tax filing positions, the Company believes that its positions would be sustained upon an audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded. The Company recognizes interest related to income taxes as interest expense and penalties as operating expenses.