Income Taxes:

For the years ended December 31, income (loss) from continuing operations before income taxes consisted of the following:



	2014		2013		2012
	(In millions)
U.S.	$	1,022	$	170	$	(1,414	)
International	10		31		40
Total income (loss) before income taxes	$	1,032	$	201	$	(1,374	)

For the years ended December 31, the total provision (benefit) for income taxes for continuing operations consisted of the following:



	2014		2013			2012
	(In millions)
Current taxes:
U.S. federal	$	—	$	(4	)	$	1
U.S. state	2		—			1
International	3		2			14
Deferred taxes:
U.S. federal	350		53			(479		)
U.S. state	25		13			(34		)
International	2		64			45
Total provision (benefit) for income taxes	$	382	$	128		$	(452	)

The provision (benefit) for income taxes for continuing operations for the indicated years was different than the amount computed using the federal statutory rate (35%) for the following reasons:



	2014		2013			2012
	(In millions)
Amount computed using the statutory rate	$	361	$	70		$	(481	)
Increase (decrease) in taxes resulting from:
State and local income taxes, net of federal effect	17		8			(18		)
Valuation allowance, state net of federal	—		(2		)	—
Foreign tax on foreign earnings	1		53			47
Other	3		(1		)	—
Total provision (benefit) for income taxes	$	382	$	128		$	(452	)

In fourth quarter 2012, we made a decision to repatriate earnings from our international operations. By doing so we made an election to have our China business be treated as a disregarded entity for U.S. federal income tax purposes, which resulted in earnings and profits of our international business in China being taxed both in the United States and China. Due to our NOL carryforward position, we do not expect to be able to utilize related foreign tax credits (FTC) before they expire and accordingly recorded a full valuation allowance against these credits. These FTCs are utilized in the alternative minimum tax (AMT) system to reduce current cash taxes. The result is a high effective tax rate in periods where our book income in China is high relative to our domestic book income. These effective tax rate fluctuations are magnified when net income approaches zero.

At December 31, the components of our deferred tax asset (liability) were as follows:



	2014			2013
	(In millions)
Deferred tax asset:
Net operating loss carryforwards	$	173		$	335
Alternative minimum tax credit	99			99
Stock-based compensation	26			25
Marketable securities	—			3
Oil and gas properties	—			59
Foreign tax credit	547			535
Commodity derivatives	—			13
Other	8			6
Total deferred tax asset	853			1,075
Deferred tax asset valuation allowances	(549		)	(584		)
Net deferred tax asset	304			491

Deferred tax liability:
Commodity derivatives	(217		)	—
Oil and gas properties	(1,715		)	(1,592		)
Total deferred tax liability	(1,932		)	(1,592		)
Net deferred tax liability	(1,628		)	(1,101		)
Less: Net current deferred tax asset (liability)	(144		)	22
Net noncurrent deferred tax liability	$	(1,484	)	$	(1,123	)

As of December 31, 2014 and 2013, we had gross net operating loss (NOL) carryforwards of approximately $0.5 billion and $1.0 billion for federal income tax and $1.6 billion and $1.7 billion for state income tax purposes, respectively, which may be used in future years to offset taxable income. NOL carryforwards of $155 million are subject to annual limitations due to stock ownership changes. We currently estimate that we will not be able to utilize $64 million of our various gross state NOLs because we do not have sufficient estimated future taxable income in the appropriate jurisdictions. To the extent not utilized, the federal NOL carryforwards will begin to expire during the years 2019 through 2033.

As of December 31, 2013, we had gross NOL carryforwards for international income tax purposes of approximately $17 million. In the fourth quarter of 2014, we wrote off the deferred tax asset and related valuation allowance since we have ceased operating in these jurisdictions and it is remote that the NOL carryforwards will be realized in the future.

As of December 31, 2014 and 2013, we had foreign tax credits of approximately $547 million and $535 million, respectively, which will expire during the years 2022 through 2024.

Utilization of deferred tax assets is dependent upon generating sufficient future taxable income in the appropriate jurisdictions within the carryforward period. Estimates of future taxable income can be significantly affected by changes in oil, gas and NGL prices; estimates of the timing and amount of future production; and estimates of future operating and capital costs. Therefore, no certainty exists that we will be able to fully utilize our existing deferred tax assets.

The change in our deferred tax asset valuation allowance is as follows at December 31:



	2014			2013			2012
	(In millions)
Balance at the beginning of the year	$	(584	)	$	(457	)	$	(11	)
Charged to provision for income taxes:
Malaysia valuation allowance	40			(15		)	(25		)
Foreign tax credit valuation allowance	(12		)	(114		)	(421		)
Brazil and other international valuation allowance	6			—			—
U.S. state net operating loss carryforwards	1			2			—
Balance at the end of the year	$	(549	)	$	(584	)	$	(457	)

As the result of the divestiture of the Malaysia operations in 2014, all of the deferred tax asset and related valuation allowance were transferred to the buyer. In the fourth quarter of 2014, we wrote off the other international deferred tax assets and related valuation allowances since we have ceased operating in these jurisdictions and it is remote that the NOL carryforwards will be realized in the future. In fourth quarter of 2014, 2013 and 2012, we recorded valuation allowances related to insufficient estimated future domestic taxable income to fully utilize foreign tax credits before they expire of $12 million, $114 million, and $421 million, respectively. The foreign tax credit deferred tax asset is fully offset by a valuation allowance. In 2014, we released $1 million of state valuation allowances due to utilization of the related state NOLs.