GULFPORT ENERGY CORPGPOR
GULFPORT ENERGY CORP Income Taxes Disclosure
INCOME TAXES
Details of income tax provisions and deferred income taxes from continuing operations are provided in the following tables.
The components of income tax expense and benefits were as follows (in thousands):
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| State | $ | — | $ | — | $ | — | |||||||||||
| Federal | — | — | — | ||||||||||||||
| Deferred: | |||||||||||||||||
| State | 71 | 11,747 | (26,704) | ||||||||||||||
| Federal | 115,424 | (67,824) | (498,452) | ||||||||||||||
| Total income tax expense (benefit) provision | $ | 115,495 | $ | (56,077) | $ | (525,156) | |||||||||||
A reconciliation of the statutory federal income tax amount to the recorded expense (benefit) follows (in thousands):
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||
| Income (loss) before federal income taxes | $ | 543,305 | $ | (317,463) | $ | 945,760 | |||||||||||||||||||||||||||||
| U.S. federal statutory tax rate | 114,094 | 21.00 | % | (66,668) | 21.00 | % | 198,610 | 21.00 | % | ||||||||||||||||||||||||||
State and local income taxes, net of federal income tax effect(1) | (479) | (0.09) | % | 8,939 | (2.82) | % | (26,018) | (2.75) | % | ||||||||||||||||||||||||||
| Valuation allowances | (56) | (0.01) | % | (259) | 0.08 | % | (699,730) | (73.99) | % | ||||||||||||||||||||||||||
| Nontaxable or nondeductible items | 1,745 | 0.32 | % | 1,857 | (0.58) | % | 1,982 | 0.21 | % | ||||||||||||||||||||||||||
| Tax credits | 191 | 0.04 | % | — | — | % | — | — | % | ||||||||||||||||||||||||||
| Other adjustments | — | — | % | 54 | (0.02) | % | — | — | % | ||||||||||||||||||||||||||
| Income tax expense (benefit) recorded | $ | 115,495 | 21.26 | % | $ | (56,077) | 17.66 | % | $ | (525,156) | (55.53) | % | |||||||||||||||||||||||
_____________________
(1) For 2025, 2024 and 2023, state taxes in Oklahoma contributed to the majority (greater than 50 percent) of the tax effect in this category.
For the year ended December 31, 2025, the Company's effective tax rate was 21.26% and an income tax expense of $115.5 million. For the year ended December 31, 2024, the Company's effective tax rate was 17.66% and an income tax benefit of $56.1 million. The higher effective income tax rate for the year ended December 31, 2025, is primarily related to the impact of state and local taxes during the year ended December 31, 2024.
The tax effects of temporary differences and net operating loss carryforwards, which give rise to deferred tax assets and liabilities at December 31, 2025 and 2024 are estimated as follows (in thousands):
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforward and tax credits | $ | 330,805 | $ | 345,770 | |||||||
| Oil and gas property basis difference | 123,496 | 194,412 | |||||||||
| Investment in pass through entities | 65,385 | 65,210 | |||||||||
| Stock-based compensation expense | 2,223 | 1,821 | |||||||||
| Change in fair value of derivative instruments | — | 6,106 | |||||||||
| Other assets | 33,491 | 56,849 | |||||||||
| Total deferred tax assets | 555,400 | 670,168 | |||||||||
| Valuation allowance for deferred tax assets | (82,637) | (83,695) | |||||||||
| Deferred tax assets, net of valuation allowance | 472,763 | 586,473 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Change in fair value of derivative instruments | 6,232 | 3,401 | |||||||||
| Right of use asset | 118 | 1,281 | |||||||||
| Other | 675 | 558 | |||||||||
| Total deferred tax liabilities | 7,025 | 5,240 | |||||||||
| Net deferred tax asset | $ | 465,738 | $ | 581,233 | |||||||
At each reporting period, the Company weighs all available positive and negative evidence to determine whether its deferred tax assets are more likely than not to be realized. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized. To assess the likelihood, the Company uses estimates and judgment regarding future taxable income and considers the tax laws in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities and tax planning strategies as well as the current and forecasted business economics of the oil and gas industry. Based upon the Company’s analysis, the Company currently believes it is more-likely-than-not that a portion of the Company's federal and state deferred tax assets will be utilized. The Company has maintained a $82.6 million valuation allowance associated with its federal and state deferred tax assets. The Company does not currently have forecasted revenues in the jurisdictions that relate to these deferred tax assets.
The Company will continue to evaluate both the positive and negative evidence on a quarterly basis in determining the need for a valuation allowance with respect to the deferred tax assets. Changes in positive and negative evidence, including differences between estimated and actual results, could result in changes in the valuation of the deferred tax assets that could have a material impact on the consolidated financial statements. Changes in existing tax laws could also affect actual tax results and the realization of deferred tax assets over time.
The Company has an available federal tax net operating loss carryforward estimated at approximately $1.5 billion as of December 31, 2025. The federal net operating loss carryforwards of approximately $186.0 million generated in tax years prior to 2018 will begin to expire in 2036. As a result of the Tax Cuts and Jobs Act, the 2018 through 2025 federal NOL carryforwards of $1.3 billion have no expiration. The Company also has state net operating loss carryovers of approximately $473.8 million that will begin to expire in 2026.
As of December 31, 2025, we had no liability for uncertain tax positions.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Mar 5, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 15, 2017 | |
| 2015 | Feb 19, 2016 | |
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.