v3.26.1
Income Tax
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Tax Note 3 - Income Tax
Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income,
plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes
for the six months ended June 30, 2026 and 2025 differs from the amount that would be provided by applying the statutory U.S.
federal income tax rate of 21% to pre-tax income primarily due to the impact of federal tax credits (principally the marginal well tax
credit), state income taxes, permanent differences, and discrete items recognized in the interim period.
The effective tax rates for the six months ended June 30, 2026 and 2025 were (17.7)% and (16.2)%, respectively. For the six months
ended June 30, 2026, we reported a tax benefit of $13 million, a change of $17 million, compared to a tax expense of $3 million for
the six months ended June 30, 2025. The effective tax rate for the six months ended June 30, 2026 was primarily impacted by the
recognition of the federal marginal well tax credit available to qualified producers and by management’s estimate of the annual
effective tax rate expected for the full financial year. The federal government provides these credits to encourage companies to
continue producing lower-volume wells during periods of low prices to maintain the underlying jobs they create and the state and local
tax revenues they generate for communities to support schools, social programs, law enforcement and other similar public services.
The differences between the statutory U.S. federal income tax rate and the effective tax rates are summarized as follows:
Six Months Ended
June 30, 2026
June 30, 2025
U.S. federal statutory tax rate
21.0%
21.0%
State income taxes, net of federal tax benefit
4.5%
4.4%
Federal credits(a)
(43.8)%
(42.9)%
Other, net
0.6%
1.3%
Effective tax rate
(17.7)%
(16.2)%
(a)Federal tax credits consist primarily of the marginal well tax credit. Because the credit is a dollar amount determined
independently of pre-tax results, its impact, expressed as a percentage of pre-tax income (loss), can be positive or negative based
on the Company's forecasted annual pre-tax book income (loss) used in the estimated annual effective tax rate.