Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

Income Taxes
3 Months Ended
Mar. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company provides for income taxes at the statutory rate of 21%. Reported income tax expense differs from the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income. These differences primarily relate to non-deductible executive compensation expenses, restricted stock unit windfalls, changes in valuation allowances, and state income taxes.
For the three months ended March 31, 2023 and 2022, the Company’s effective income tax rates were approximately 30% and 1%, respectively. The primary differences between the effective tax rate and the statutory rate for the three months ended March 31, 2023 resulted from the release of the valuation allowance recorded against the Company’s net deferred tax assets as discussed further below. For the three months ended March 31, 2022, the effective tax rate differed from the statutory rate as a result of the valuation allowance that was in place and the effect of state income taxes.
Deferred Tax Asset Valuation Allowance
Management monitors company-specific, oil and natural gas industry and worldwide economic factors and assesses the likelihood that the Company’s net deferred tax assets will be utilized prior to their expiration. As previously disclosed in the Company’s 2022 Annual Report, beginning in the second quarter of 2020 and through the fourth quarter of 2022, the Company maintained a valuation allowance against its net deferred tax assets. As of March 31, 2023, considering all available evidence (both positive and negative), the Company concluded that it is more likely than not that the deferred tax assets would be realized and released the valuation allowance. This release resulted in a deferred income tax benefit of $52.0 million for the three months ended March 31, 2023.