Crescent Energy CoCRGY
Crescent Energy Co Income Taxes Disclosure
Income Taxes
We are subject to U.S. federal income and state tax on our allocable share of any taxable income of OpCo.
During the year ended December 31, 2025, we decreased APIC by $136.9 million related to a change in the deferred tax liability related to our estimated basis in our ownership interests in OpCo as a result of the Corporate Simplification and the 2025 Class A Redemption. During the year ended December 31, 2024, we decreased APIC by $84.7 million related to a change in the deferred tax liability related to our estimated basis in our ownership interests in OpCo as a result of the 2024 Equity Issuances, the SilverBow Merger and Class A Redemptions. As of December 31, 2025 and 2024, we did not have any uncertain tax positions.
On July 4, 2025, the OBBBA was enacted into law. The OBBBA is a significant piece of tax legislation that includes provisions that permanently restore an EBITDA-based section 163(j) calculation for tax years beginning after December 31, 2024 and 100% bonus depreciation under section 168(k) for property acquired and placed in service after January 19, 2025, deferring the recognition of a significant portion of current federal tax for multiple years.
Details of current and deferred income taxes are provided in the following tables:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal income tax expense (benefit) | (in thousands) | ||||||||||||||||
Current | $ | (1,288) | $ | 1,422 | $ | (17) | |||||||||||
| Deferred | 41,146 | (39,379) | 19,520 | ||||||||||||||
| State income tax expense (benefit) | |||||||||||||||||
Current | 136 | 3,360 | 511 | ||||||||||||||
| Deferred | (5,490) | 3,525 | 3,213 | ||||||||||||||
| Total income tax expense (benefit) | $ | 34,504 | $ | (31,072) | $ | 23,227 | |||||||||||
The difference between the statutory federal income tax rate and the Company's effective income tax rate after the adoption of ASU 2023-09 is as follows:
| Year Ended December 31, | |||||||||||
| 2025 | |||||||||||
Amount | % | ||||||||||
(in thousands) | |||||||||||
| Federal income taxes statutory rate | $ | 42,351 | 21.0 | % | |||||||
| Change in rate as a result of: | |||||||||||
State income tax provision, net of federal benefit (1) | (5,512) | (2.7) | % | ||||||||
| Merger transaction costs | 7,430 | 3.7 | % | ||||||||
Change in valuation allowance | (242) | (0.1) | % | ||||||||
| Permanent adjustments | — | — | % | ||||||||
| Income attributable to noncontrolling interests and redeemable noncontrolling interests | (7,195) | (3.6) | % | ||||||||
Return to provision | (2,328) | (1.2) | % | ||||||||
| Effective income tax rate | $ | 34,504 | 17.1 | % | |||||||
(1)During the year ended December 31, 2025, the majority (greater than 50%) of our state income tax provision reduction related to the removal of Oklahoma deferred tax liabilities associated with our divestitures.
The difference between the statutory federal income tax rate and the Company's effective income tax rate prior to the adoption of ASU 2023-09 is as follows:
Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Federal income taxes statutory rate | 21.0 | % | 21.0 | % | |||||||
Change in rate as a result of: | |||||||||||
| State income tax provision, net of federal benefit | (3.1) | % | 1.0 | % | |||||||
SilverBow Merger transaction costs | 3.1 | % | — | % | |||||||
Change in valuation allowance (1) | (0.6) | % | — | % | |||||||
Permanent adjustments | (0.1) | % | — | % | |||||||
| Income attributable to noncontrolling interests and redeemable noncontrolling interests | (2.6) | % | (15.3) | % | |||||||
| Other | 0.7 | % | — | % | |||||||
| Effective income tax rate | 18.4 | % | 6.7 | % | |||||||
(1)During the year ended December 31, 2024, we recognized changes in the valuation allowance related to our recognized built-in loss ("RBIL") deferred tax asset as it was not more likely than not to be fully utilized.
Significant components of the Company's deferred income taxes were as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax liabilities | (in thousands) | ||||||||||
| Outside basis in OpCo | $ | 541,831 | $ | 529,071 | |||||||
| OpCo state deferred tax | 11,671 | 13,832 | |||||||||
Other | 137 | — | |||||||||
| Total deferred tax liabilities | 553,639 | 542,903 | |||||||||
| Deferred tax assets | |||||||||||
U.S. federal and state net operating loss ("NOL") carryforwards | 269,329 | 132,811 | |||||||||
| Recognized built-in loss carryforward | 25,513 | 21,637 | |||||||||
| NOL and RBIL valuation allowance | (44,894) | (45,136) | |||||||||
| Equity-based compensation | 114,620 | 47,402 | |||||||||
| Capitalized intangible drilling costs | 300,487 | — | |||||||||
| Other | 20,619 | 15,860 | |||||||||
| Total deferred tax assets, net of valuation allowance | 685,674 | 172,574 | |||||||||
| Net deferred income tax (asset) liability | $ | (132,035) | $ | 370,329 | |||||||
Cash paid for income taxes (net of refunds received) were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
U.S. Federal | $ | 4,166 | $ | — | $ | (5,000) | |||||||||||
U.S. State: | |||||||||||||||||
Colorado | 692 | — | 85 | ||||||||||||||
Oklahoma | 437 | 15 | 1,633 | ||||||||||||||
Texas | 2,861 | 1,166 | 563 | ||||||||||||||
Utah | 460 | 83 | 671 | ||||||||||||||
Other | 1,352 | 587 | 657 | ||||||||||||||
Total U.S. State | 5,802 | 1,851 | 3,609 | ||||||||||||||
Total U.S. Federal and State taxes | $ | 9,968 | $ | 1,851 | $ | (1,391) | |||||||||||
In December 2025, we completed the Vital Energy Merger, see NOTE 3 – Acquisitions and Divestitures for more information. As part of the preliminary purchase price allocation, we recognized a net deferred tax asset of $695.3 million to reflect differences between tax basis and the fair value of Vital’s assets acquired and liabilities assumed. Tax attributes related to U.S. federal NOLs are included in the net deferred tax asset. Due to the change of ownership of Vital in connection with the Vital Energy Merger, the availability of these attributes will have utilization limitations under Section 382.
In July 2024, we completed the SilverBow Merger, see NOTE 3 – Acquisitions and Divestitures for more information. As part of the purchase price allocation, we recognized a net deferred tax liability of $79.1 million to reflect differences between tax basis and the fair value of SilverBow’s assets acquired and liabilities assumed. Tax attributes related to U.S. federal NOLs and interest expense are included in the net deferred tax liability. Due to the change of ownership of SilverBow in connection with the SilverBow Merger, the availability of these attributes will have utilization limitations under Section 382.
We continually assess the available positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2025 and 2024, a valuation allowance has been recorded to recognize only the portion of the deferred tax assets that are more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted in the future.
As of December 31, 2025 and 2024, we had U.S. federal and state NOLs of $269.3 million and $132.8 million, respectively. A portion of these NOLs are subject to a valuation allowance of $23.5 million as of December 31, 2025 and 2024, because we do not believe they will be recoverable as a result of limitations on their use under Section 382. During the year ended December 31, 2025 we reduced our valuation allowance by $0.2 million and increased the valuation allowance by $1.0 million during the year ended December 31, 2024, respectively, related to RBIL property that was also subject to the Section 382 limitation. At December 31, 2025 and 2024, the valuation allowance related to our RBIL carryforward was $21.4 million and $21.6 million, respectively. As of December 31, 2025 our federal and state NOL expiration dates were as follows:
| Expiration dates | Amounts | |||||||
| (in thousands) | ||||||||
| 2029-2037 | $ | 70,600 | ||||||
| Indefinite | 198,729 | |||||||
| Total federal and state NOLs | $ | 269,329 | ||||||
As we noted above, we have U.S. federal NOL carryforwards and RBIL property that are subject to limitation under Section 382. Pursuant to Section 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended, utilization of our NOL and RBIL carryforwards is subject to an annual limitation. These annual limitations may result in the expiration of NOL and RBIL carryforwards prior to utilization; accordingly we have maintained a valuation allowance related to U.S. federal NOL and RBIL carryforwards that we do not believe are recoverable due to these Section 382 limitations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Mar 4, 2024 | |
| 2022 | Mar 7, 2023 | |
| 2021 | Mar 10, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.