Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

Note 4 - Income Taxes

Income tax expense for the six-month periods ended June 30, 2011, and 2010, differs from the amounts that would be provided by applying the statutory U.S. federal income tax rate to income before income taxes as a result of the estimated effect of the domestic production activities deduction, percentage depletion, the effect of state income taxes, and other permanent differences.

The provision for income taxes consists of the following:

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands)
Current portion of income tax (expense) benefit:
Federal	$	(2,212	)	$	1,759		$	(9,156	)	$	(8,216	)
State	(224		)	21			(399		)	(311		)
Deferred portion of income tax (expense)	(70,415		)	(14,212		)	(52,241		)	(78,820		)
Total income tax (expense)	$	(72,851	)	$	(12,432	)	$	(61,796	)	$	(87,347	)
Effective tax rate	36.9		%	40.8		%	36.8		%	37.7		%

On a year-to-date basis, a change in the Company’s effective tax rate between reported periods will generally reflect differences in its estimated highest marginal state tax rate due to changes in the composition of income from Company activities among state tax jurisdictions.  The cumulative effects of state rate changes are reflected in the period legislation is enacted.  Changes in the effective tax rate between periods also occur due to estimates for the domestic production activities deduction, percentage depletion, and for potential permanent state tax items that affect the presented periods differently due to oil and gas price variability and the impact of non-core asset sales. The quarterly rate can also be impacted by the proportion of income earned in reported periods.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in various states.  With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations by these tax authorities for years before 2007.  In the first quarter of 2011, the Company received the anticipated $5.5 million refund from its 2006 tax year as a result of a net operating loss carryback claim from the 2008 tax year.  In the fourth quarter of 2010, the Internal Revenue Service initiated an audit of the Company for the 2009 tax year.   The audit was concluded in the second quarter of 2011 with a $110,000 decrease to the total 2005 refund claim of $25 million.  A quick refund claim of $22.9 million from 2005 was received in the third quarter of 2010.  The Company’s remaining refundable income tax balance at June 30, 2011, includes the remaining $2 million 2005 amount.