v3.26.1
Income Taxes
 6 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of the Company's consolidated provision for income taxes from operations are as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(In thousands)
Current income tax (benefit) expense:
Federal$(770)$4,345 $— $13,469 
State(130)493 120 1,434 
Total current income tax (benefit) expense$(900)$4,838 $120 $14,903 
Deferred income tax expense:
Federal$26,842 $4,466 $4,468 $2,666 
State1,391 400 457 374 
Total deferred income tax expense$28,233 $4,866 $4,925 $3,040 
Total income tax expense$27,333 $9,704 $5,045 $17,943 
Beginning in the first quarter of 2026, the Company elected to change its interim income tax reporting methodology from the income statement method to the balance sheet method and will apply this method consistently for the remainder of the fiscal year. The change was made because of significant unrealized losses on derivative instruments recognized during the three months ended March 31, 2026, which are expected to reverse in future periods, and use of the income statement method would have caused a disproportionate amount of the related tax benefit to be recognized in the first quarter. Under the balance sheet method, interim income tax expense is based on changes in deferred tax assets and liabilities during the period, which the Company believes more appropriately reflects the allocation of the annual effective tax rate between current and deferred income tax expense. This change affects only the allocation of the interim income tax expense between current and deferred income tax expense and does not affect the Company’s full-year effective tax rate or total quarterly income tax expense.
A reconciliation of the statutory federal income tax rate to the Company's effective income tax rate is as follows:
Three Months Ended June 30,
20262025
AmountPercentAmountPercent
(In thousands)
U.S federal statutory tax rate
$24,088 21.0 %$8,932 21.0 %
State income taxes, net of federal income tax effect(1)
2,722 2.4 %705 1.7 %
Nondeductible items:
Nondeductible compensation
701 0.6 %166 0.4 %
Stock-based compensation
(227)(0.2)%(101)(0.3)%
Other49 — %2 — %
Effective income tax rate$27,333 23.8 %$9,704 22.8 %
Six Months Ended June 30,
20262025
AmountPercentAmountPercent
(In thousands)
U.S federal statutory tax rate
$4,616 21.0 %$16,180 21.0 %
State income taxes, net of federal income tax effect(1)
513 2.3 %1,428 1.9 %
Nondeductible items:
Nondeductible compensation
142 0.6 %435 0.6 %
Stock-based compensation
(240)(1.1)%(106)(0.2)%
Other14 0.1 %6 — %
Effective income tax rate$5,045 22.9 %$17,943 23.3 %
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(1)State taxes in New Mexico and Texas make up the tax effect in this category.
Cash paid for income taxes was as follows:
Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(In thousands)
Total federal
$11,720 $2,900 $21,720 $11,900 
State and local:
New Mexico
$1,892 $2,020 $1,892 $2,020 
Texas
591 864 591 864 
Total state and local
$2,483 $2,884 $2,483 $2,884 
Total income taxes paid
$14,203 $5,784 $24,203 $14,784 
The Company's federal income tax returns for the years subsequent to December 31, 2021, remain subject to examination. The Company's income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2020. The Company currently believes that all other significant filing positions are highly certain and that all of our other significant income tax positions and deductions would be sustained under audit or the final resolution would not have a material effect on our consolidated financial statements. Therefore, the Company has not established any reserves for uncertain tax positions.