Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.3.1.900
Income Taxes
12 Months Ended
Dec. 31, 2015
Income Taxes [Abstract]  
Income Taxes

Note 11 - Income Taxes

 

The following table presents Callon’s deferred tax assets and liabilities with respect to its carryforwards and other temporary differences:

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

2015

 

2014

Deferred tax asset

 

 

 

 

 

 

  Federal net operating loss carryforward

 

$

107,935 

 

$

86,629 

  Statutory depletion carryforward

 

 

8,843 

 

 

8,876 

  Alternative minimum tax credit carryforward

 

 

208 

 

 

208 

  Asset retirement obligations

 

 

630 

 

 

1,003 

  Other

 

 

8,241 

 

 

6,621 

     Deferred tax asset before valuation allowance

 

 

125,857 

 

 

103,337 

Deferred tax liability

 

 

 

 

 

 

  Oil and natural gas properties

 

 

6,488 

 

 

54,723 

  Other

 

 

10,526 

 

 

10,140 

     Total deferred tax liability

 

 

17,014 

 

 

64,863 

Net deferred tax asset before valuation allowance

 

 

108,843 

 

 

38,474 

  Less: Valuation allowance

 

 

(108,843)

 

 

Net deferred tax asset

 

$

 

$

38,474 

 

If not utilized, the Company’s federal operating loss (“NOL”) carryforwards will expire as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Expiring

 

 

Total

 

2016-2021

 

2022-2024

 

2025-2027

 

2028-2030

 

2031-2035

Federal NOL carryforwards

 

$

308,385 

 

$

13,892 

 

$

101,495 

 

$

39,714 

 

$

32,111 

 

$

121,173 

 

As a result of the write-down of oil and natural gas properties discussed in Note 13, the Company has incurred a cumulative three year loss. Because of the impact the cumulative loss has on the determination of the recoverability of deferred tax assets through future earnings, the Company assessed the ability to realize its deferred tax assets based on the future reversals of existing deferred tax liabilities. Accordingly, the Company established a valuation allowance for a portion of the deferred tax asset. The valuation allowance was $108,843 as of December 31, 2015.

 

The Company had no significant unrecognized tax benefits at December 31, 2015. Accordingly, the Company does not have any interest or penalties related to uncertain tax positions. However, if interest or penalties were to be incurred related to uncertain tax positions, such amounts would be recognized in income tax expense. Tax periods for years 2002 through 2015 remain open to examination by the federal and state taxing jurisdictions to which the Company is subject.

 

The Company provides for income taxes at a statutory rate of 35% adjusted for permanent differences expected to be realized, which primarily relate to non-deductible executive compensation expenses and state income taxes. The following table presents a reconciliation of the reported amount of income tax expense to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

Components of income tax rate reconciliation

 

2015

 

2014

 

2013

  Income tax expense computed at the statutory federal income tax rate

 

 

35% 

 

 

35% 

 

 

35% 

  Percentage depletion carryforward

 

 

—%

 

 

—%

 

 

(8)%

  State taxes net of federal benefit

 

 

1% 

 

 

1% 

 

 

4% 

  Restricted stock and stock options

 

 

—%

 

 

—%

 

 

5% 

  Section 162(m)

 

 

(1)%

 

 

2% 

 

 

6% 

  Valuation allowance

 

 

(54)%

 

 

—%

 

 

—%

Effective income tax rate

 

 

(19)%

 

 

38% 

 

 

42% 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

Components of income tax expense

 

2015

 

2014

 

2013

  Current state income tax expense

 

$

 

$

 

$

326 

  Deferred federal income tax (benefit) expense

 

 

(69,087)

 

 

22,373 

 

 

2,652 

  Deferred state income tax (benefit) expense

 

 

(1,282)

 

 

761 

 

 

126 

  Valuation allowance

 

 

108,843 

 

 

 

 

Total income tax expense

 

$

38,474 

 

$

23,134 

 

$

3,104