v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
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, including 100% bonus depreciation, domestic research cost expensing, and the business interest expense limitation. ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. The Company has completed its initial assessment of the OBBBA corporate tax provisions which were enacted on July 4, 2025 and estimated its impact on the consolidated financial statements to be immaterial.

The Company’s income tax (benefit) provision consisted of the following components (in thousands):
Year Ended December 31,
202520242023
Current
Federal$— $— $— 
State— — — 
— — — 
Deferred
Federal(4,755)(19,370)12,002 
State(780)(2,862)1,958 
(5,535)(22,232)13,960 
Total (benefit) provision $(5,535)$(22,232)$13,960 

A reconciliation of the (benefit) provision for income taxes at the statutory federal tax rate to the Company’s actual income tax (benefit) provision is as follows (in thousands):
Year Ended December 31, 2025Year Ended December 31, 2024Year Ended December 31, 2023
$ AmountPercent$ AmountPercent$ AmountPercent
Provision for income taxes at U.S. Federal statutory rate$13,580 21.0 %$8,559 21.0 %$15,712 21.0 %
State and local income taxes, net of federal benefit (1)(780)(1.2)%(2,862)(7.0)%1,958 2.6 %
Effect of changes in tax laws or rates enacted in the current period— — %— — %— — %
Changes in the valuation allowance(18,380)(28.4)%(27,930)(68.5)%(3,699)(4.9)%
Nontaxable or nondeductible items45 0.1 %1 — %(69)(0.1)%
Other adjustments— — %— — %58 0.1 %
Total$(5,535)(8.5)%$(22,232)(54.5)%$13,960 18.7%
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(1) The state that contributes to the majority (greater than 50%) of the tax effect in this category is Oklahoma.

Deferred income taxes are provided to reflect the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future income in periods in which the deferred tax assets can be utilized. In prior years, we determined that the deferred tax assets did not meet the more likely than not threshold of being utilized and thus recorded a valuation allowance. As of December 31, 2025, we partially released our valuation allowance on our deferred tax assets by $78.3 million. We anticipate being able to utilize these deferred tax assets based on the generation of future income. A change in the estimate of future income could cause the valuation allowance to be adjusted in subsequent periods. Our partial valuation allowance release of $72.8 million as of December 31, 2024 was increased by $5.5 million due to changes in expected future income, resulting in net deferred tax assets of $78.3 million as of December 31, 2025.
Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
 Year Ended December 31,
20252024
Deferred tax liabilities
Investments (1)$— $— 
Derivative contracts— — 
Total deferred tax liabilities— — 
Deferred tax assets
Property, plant and equipment50,421 57,061 
Net operating loss carryforwards363,807 373,506 
Tax credits and other carryforwards33,851 33,851 
Asset retirement obligations13,091 13,327 
Investments (1)98 97 
Other1,935 1,454 
Total deferred tax assets463,203 479,296 
Valuation allowance(384,867)(406,495)
Net deferred tax asset$78,336 $72,801 
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(1) Includes the Company’s deferred tax liability resulting from its investment in the Royalty Trusts.

Internal Revenue Code (“IRC”) Section 382 addresses company ownership changes and specifically limits the utilization of certain deductions and other tax attributes on an annual basis following an ownership change. As a result of the Chapter 11 reorganization and related transactions, the Company experienced an ownership change within the meaning of IRC Section 382 during 2016 that subjected certain of the Company’s tax attributes, including net operating losses ("NOLs"), to an IRC Section 382 limitation. This limitation has not resulted in cash taxes for any period subsequent to the ownership change. Since the 2016 ownership change, the Company has generated additional NOLs and other tax attributes that are not currently subject to an IRC Section 382 limitation. The Company's ability to use NOLs and other tax attributes to reduce taxable income and income taxes could be materially impacted by a future IRC 382 ownership change. Future transactions involving the Company's stock including those outside of the Company's control could cause an IRC 382 ownership change resulting in a limitation on tax attributes currently not limited and a more restrictive limitation on tax attributes currently subject to the previous IRC 382 limitation.

As of December 31, 2025, the Company had approximately $1.6 billion of federal NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation. Of the $1.6 billion of federal NOL carryforwards, $0.7 billion expire during the years 2028 through 2037, while $0.9 billion do not have an expiration date. In addition, the Company had approximately $1.0 billion of state NOL carryforwards, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation. Of the $1.0 billion in state NOL carryforwards, approximately $199.0 million are derived from states the Company currently does not operate in. Of the remaining state NOL carryforwards, $645.0 million do not have an expiration date and $176.0 million expire during the years 2025 through 2037. Additionally, the Company had federal tax credits in excess of $33.5 million, which begin expiring in 2029.

The Company did not have any unrecognized tax benefits at December 31, 2025, 2024 or 2023.
The Company’s only taxing jurisdiction is the United States (federal and state). The Company’s tax years 2022 to present remain open for federal examination. Additionally, tax years 2005 through 2021 remain subject to examination for the purpose of determining the amount of federal NOL and other carryforwards. The number of years open for state tax audits varies, depending on the state, but is generally from three to five years.