Gulfport Energy Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of income tax provision (benefit)

The components of income tax benefits and expense were as follows (in thousands):


	Successor		Predecessor
	Period from May 18, 2021 through December 31, 2021		Period from January 1, 2021 through May 17, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
Current:
State	$	(39)	$	(7,968)	$	—	$	—
Federal	—		—		(273)		(7)
Deferred:
State	—		—		7,563		(7,556)
Federal	—		—		—		—
Total income tax (benefit) expense provision	$	(39)	$	(7,968)	$	7,290	$	(7,563)

Schedule of reconciliation to the statutory federal income tax

A reconciliation of the statutory federal income tax amount to the recorded expense follows (in thousands):


	Successor		Predecessor
	Period from May 18, 2021 through December 31, 2021		Period from January 1, 2021 through May 17, 2021		Year Ended December 31, 2020		Year Ended December 31, 2019
(Loss) income before federal income taxes	$	(112,868)	$	243,026	$	(1,617,843)	$	(2,009,921)
Expected income tax at statutory rate	(23,702)		51,036		(339,747)		(422,083)
State income taxes	(3,177)		(12,484)		(14,696)		(28,316)
Bankruptcy adjustments	44,748		(111,285)
Remeasurement of state deferred tax asset	(7,966)		—
Other differences	2,841		445		10,800		3,372
Change in valuation allowance due to current year activity	(12,783)		64,320		350,933		439,464
Income tax (benefit) expense recorded	$	(39)	$	(7,968)	$	7,290	$	(7,563)

For the Predecessor period ending May 17, 2021, the Company has an effective tax rate of (3.3)% and an income tax benefit of $8.0 million. The tax benefit is entirely attributable to an Oklahoma refund claim associated with an examination relating to historical tax returns. The effective tax rate differs from the statutory tax rate due to the Company’s valuation allowance position and the permanent adjustments relating to the Chapter 11 Emergence. For the Successor Period, the Company has an effective tax rate of 0.03% and tax expense of $39 thousand. The tax expense is entirely attributable to the Oklahoma refund claim that was filed during the third quarter, resulting in an adjustment to the benefit recorded during the Predecessor Period. We did not record any additional income tax expense for the Successor Period as a result of maintaining a full valuation allowance against our net deferred tax asset.

Schedule of deferred tax assets and liabilities

The tax effects of temporary differences and net operating loss carryforwards, which give rise to deferred tax assets and liabilities at December 31, 2021, and 2020 are estimated as follows (in thousands):


	Successor		Predecessor
	December 31, 2021		December 31, 2020
Deferred tax assets:
Net operating loss carryforward and tax credits	$	298,127	$	415,719
Oil and gas property basis difference	432,959		463,705
Investment in pass through entities	58,751		61,078



Change in fair value of derivative instruments	86,296		7,656








Other	31,298		41,292
Total deferred tax assets	907,431		989,450
Valuation allowance for deferred tax assets	(907,358)		(985,528)
Deferred tax assets, net of valuation allowance	73		3,922
Deferred tax liabilities:



Other	73		3,922
Total deferred tax liabilities	73		3,922
Net deferred tax asset	$	—	$	—