Annual report [Section 13 and 15(d), not S-K Item 405]

INCOME TAXES

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INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 14 — INCOME TAXES
For the years ended December 31, 2024, 2023, and 2022, components of our provision for income taxes are as follows:
Provision for Income Taxes:
 2024 2023 2022
Federal deferred tax $ 19,096,010  $ (901,522) $ 6,437,680 
State current tax
 401,197  72,213  — 
State deferred tax 943,747  954,551  1,971,044 
Provision for Income Taxes
 $ 20,440,954  $ 125,242  $ 8,408,724 
The following is a reconciliation of income taxes computed using the U.S. federal statutory rate to the provision for income taxes:
Rate Reconciliation:
 2024 2023 2022
Pre-tax book income (1)
$ 87,911,268  $ 104,917,670  $ 147,043,749 
Tax at federal statutory rate $ 18,461,366  $ 22,032,711  $ 30,879,187 
Excess tax benefit from stock option exercises and restricted stock vesting 104,344  478,304  (312,268)
Adjust prior estimates to tax return 69,654  (474,617) 214,740 
States taxes, net of federal benefit 1,008,096  1,122,782  1,443,145 
Valuation allowance —  (24,182,975) (24,151,242)
Non-deductible expenses and other 797,494  1,149,037  335,162 
Provision for Income Taxes $ 20,440,954  $ 125,242  $ 8,408,724 
(1) Amount in the year ended December 31, 2023 represented pre-tax book income, net of income taxes paid.
The Company's deferred tax position reflects the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax reporting. The net deferred taxes consisted of the following as of December 31, 2024 and 2023:
12/31/2024
Total		 12/31/2023
Total
Deferred Tax Assets
Net operating loss (NOL) carryforward 68,516,720  82,011,212 
Share-based compensation 1,097,273  1,372,277 
Asset retirement obligation 5,755,174  6,165,239 
Fair value of derivative instruments —  224,209 
§163(j) business interest expense carryforward 18,838,600  12,854,900 
Other 1,672,268  1,638,297 
Gross Deferred Tax Assets 95,880,035  104,266,134 
Less: valuation allowance —  — 
Net Deferred Tax Assets 95,880,035  104,266,134 
Deferred Tax Liabilities
Property and equipment (123,318,803) (111,872,367)
Fair value of derivative instruments (392,761) — 
Other (760,273) (945,812)
Net Deferred Tax Liabilities (124,471,837) (112,818,179)
Net Deferred Tax Liability (28,591,802) (8,552,045)
As of December 31, 2024, the Company had net operating loss carryforwards for federal income tax reporting purposes of approximately $89.7 million which, if unused, will begin to expire in 2033 and fully expire in 2037 and an additional $235.0 million that can be carried forward indefinitely.
The shares issued for the Stronghold Acquisition (further discussed in NOTE 5 — ACQUISITIONS & DIVESTITURES) resulted in the Company having an ownership change under Section 382 of the Internal Revenue Code of 1986, as amended. Section 382 limits the availability of certain tax attributes, including net operating losses and disallowed interest carryforwards, to offset future taxable income of the Company. In evaluating its need for a valuation allowance against its deferred tax assets, the Company has estimated the amount of tax attributes related to the pre-ownership change period to be available under Section 382 in periods in which it expects deferred tax liabilities to be realized based on currently available information. Based on its current analysis, the Company does not anticipate any material tax attributes to expire unused as result of the Section 382 ownership change; however, the ultimate timing in the amount of tax attributes available in future periods may be different than the Company's current estimate and will be determined in each year as new information becomes available. Changes in expectation in the timing of the availability of the Company's tax attributes could result in adjustments to the valuation allowance in future years as it updates its analysis based on new information.
As of December 31, 2024, we carried a valuation allowance against our federal and state deferred tax assets of $0. We have considered both the positive and negative evidence in determining whether it was more likely than not that some portion or all of our deferred tax assets will be realized. The amount of deferred tax assets considered realizable could, however, be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence is no longer present and additional weight is given to subjective positive evidence, including projections for growth. As of June 30, 2023, the Company was no longer in a cumulative loss position. As a result, future forecasted pre-tax book income was considered as positive evidence in assessing the valuation allowance. Based on the change in judgment on the realizability of the related federal deferred tax assets in future years, the Company released $24.2 million of valuation allowance as a benefit during the year ended December 31, 2023. This, coupled with the income tax provision for the year ended December 31, 2024 resulted in an ending federal net deferred tax liability of $24,632,169. Additionally, the Company reported a net state deferred tax liability at December 31, 2024 of $3,959,633 attributable to certain state deferred tax liabilities mainly associated with property and equipment.