Note 6 — Income Taxes

The following table summarizes the components of the provision for income taxes (in thousands):

		2013				2012				2011
Current income tax benefit (expense)		$	16			$	(16	)		$	—
Deferred income tax benefit (expense)			64,663				(11,865	)			(17,870	)
Total income tax benefit (expense)		$	64,679			$	(11,881	)		$	(17,870	)

The provision for income taxes for the years ended December 31, 2013, 2012 and 2011 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 35% to income before income taxes. This difference relates primarily to state income taxes and estimated permanent differences as follows (in thousands):

		2013				2012				2011
Expected statutory income tax benefit (expense)		$	62,470			$	(10,450	)		$	(16,924	)
State income tax benefit (expense)			3,254				(694	)			(1,112	)
Share-based compensation			(2,031	)			(703	)			—
Non-deductible executive compensation			(54	)			(215	)			—
Other			1,040				181				166
Total income tax benefit (expense)		$	64,679			$	(11,881	)		$	(17,870	)

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are presented below (in thousands):

		December 31,
		2013				2012
Current deferred income tax assets:
Derivative financial instruments		$	3,914			$	8,706
Asset retirement obligation			675				1,275
Equity compensation			2,924				—
Other			817				776
Total current assets			8,330				10,757
Long term deferred income tax assets (liabilities):
Derivative financial instruments			—				2,885
Net operating loss carryovers			62,457				27,565
Asset retirement obligation			11,161				5,874
Startup and organization costs			158				178
Deferred acquisition costs			45				45
Percentage depletion			1,323				1,118
Property and equipment costs			(110,566	)			(140,048	)
Equity compensation			1,233				2,551
Other			(635	)			(2,082	)
Total long term liability			(34,824	)			(101,914	)
Net deferred tax liability		$	(26,494	)		$	(91,157	)

The Company has U.S. net operating loss carry forwards of $169.2 million at December 31, 2013, which will begin expiring in 2026. A valuation allowance against deferred tax assets at December 31, 2013 is not considered necessary because in the Company’s opinion it is more likely than not that the deferred tax asset will be fully realized.

The Company previously adopted the accounting for uncertain tax positions per FASB ASC Topic 740, Accounting for Income Taxes. This guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. This guidance requires that the Company recognize in the consolidated financial statements, only those tax positions that are “more-likely-than-not” of being sustained, based on the technical merits of the position. This guidance had no effect on the Company’s financial position, cash flows or results of operations for 2013, 2012 or 2011 as the Company had no unrecognized tax benefits. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company has no accrued interest or penalties related to uncertain tax positions as of December 31, 2013, 2012 or 2011.

The Company is subject to the following material taxing jurisdictions: U.S. federal, Colorado, Utah, North Dakota, Texas and New Mexico. The tax years that remain open to examination by the Internal Revenue Service are the years 2009 through 2013. The tax years that remain open to examination by state taxing authorities are 2009 through 2013.