Income Taxes |
6 Months Ended |
|---|---|
Dec. 31, 2025 | |
| Income Taxes | |
| Income Taxes | Note 6. Income Taxes The Company files a consolidated federal income tax return in the United States and various combined and separate filings in several state and local jurisdictions. There were no unrecognized tax benefits, nor any accrued interest or penalties associated with unrecognized tax benefits during the periods presented in the unaudited condensed consolidated financial statements. The Company believes that it has appropriate support for the income tax positions taken and to be taken on the Company’s tax returns and that the accruals for tax liabilities are adequate for all open years based on its assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter. The Company’s federal and state income tax returns are open to audit under the statute of limitations for the fiscal years ended June 30, 2021 through June 30, 2024 for federal tax purposes and for the fiscal years ended June 30, 2020 through June 30, 2024 for state tax purposes. To the extent the Company utilizes net operating losses (“NOLs”) generated in earlier years, such earlier years may also be subject to audit. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation and the business interest expense limitation, as well as other provisions. The Company’s consolidated financial statements for the six months ended December 31, 2025, include the OBBBA’s effect for the period beginning July 1, 2025, through December 31, 2025. Some of the provisions in the OBBBA are effective for periods before July 1, 2025. The Company plans to file its June 30, 2025 tax return on or before April 15, 2026, and thus any tax effects related to prior periods will be recorded in the financial statements as a return to provision adjustment once identified and quantifiable. While the Company does not expect the OBBBA to have a material impact on its results of operations, it does expect the OBBBA to provide a benefit to its cash flows from operating activities. For the six months ended December 31, 2025, the Company recognized an income tax expense of $1.2 million and had an effective tax rate of 38.9% compared to income tax expense of $0.1 million and an effective tax rate of 31.4% for the six months ended December 31, 2024. The increase in the effective tax rate from the prior year period is due to projected higher state income taxes in Oklahoma associated with the Minerals Acquisition in August 2025. The Company evaluates its tax provision on a quarterly basis and adjusts it effective tax rate given changes in facts and circumstances expected in the future. The Company’s effective tax rate will typically differ from the statutory federal rate as a result of state income taxes, primarily in the states of Louisiana, North Dakota, Oklahoma and Texas, due to percentage depletion in excess of basis, and other permanent differences. For both periods, the respective statutory federal tax rate was 21%. Deferred income taxes primarily represent the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. |