Matador Resources CoMTDR
Matador Resources Co Income Taxes Disclosure
NOTE 8 — INCOME TAXES
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted. The legislation, among other things, makes permanent, extends or modifies certain provisions under the 2017 Tax Cuts and Jobs Act, including (i) a permanent extension of 100% bonus depreciation for certain capital expenditures, (ii) an immediate deduction of domestic research or experimental expenditures, (iii) an acceleration of deductions for unamortized domestic research and development expenditures and (iv) an elimination of the deduction for depreciation, amortization and depletion from the definition of “adjusted taxable income” for the purpose of calculating limitations on interest expense deductions. Pursuant to ASC Topic 740, Income Taxes, the effects of changes in tax law are recognized in the period of enactment, and as a result, the Company recognized the impacts of this legislation in its consolidated financial statements for the year ended December 31, 2025. While the enactment of OBBBA resulted in a decrease in the current income tax provision and corresponding increase in the deferred income tax provision for the year ended December 31, 2025, the effective income tax rates and the total income tax provision were not materially impacted.
Deferred tax assets and liabilities are the result of temporary differences between the financial statement carrying values and the tax bases of assets and liabilities. The Company’s net deferred tax position as of December 31, 2025 and 2024 is as follows (in thousands).
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Deferred tax assets | ||||||||||||||
| Net operating loss carryforwards | $ | 118,860 | $ | 14,338 | ||||||||||
| Lease liabilities | 24,021 | 31,843 | ||||||||||||
| Compensation | 17,615 | 16,562 | ||||||||||||
| Research and experimental tax credits, net of reserve | 8,376 | 1,117 | ||||||||||||
| Interest expense carryforward | — | 15,891 | ||||||||||||
| Other | 2,553 | 1,677 | ||||||||||||
| Total deferred tax assets | 171,425 | 81,428 | ||||||||||||
| Valuation allowance on deferred tax assets | $ | (8,985) | (11,957) | |||||||||||
| Total deferred tax assets, net of valuation allowance | 162,440 | 69,471 | ||||||||||||
| Deferred tax liabilities | ||||||||||||||
| Property and equipment | (1,036,280) | (802,186) | ||||||||||||
| Less than wholly-owned subsidiaries | (107,566) | (75,580) | ||||||||||||
| Lease right of use assets | (24,021) | (31,843) | ||||||||||||
| Unrealized gain on derivatives | (8,097) | (4,039) | ||||||||||||
| Other | (2,407) | (3,489) | ||||||||||||
| Total deferred tax liabilities | (1,178,371) | (917,137) | ||||||||||||
| Net deferred tax liabilities | $ | (1,015,931) | $ | (847,666) | ||||||||||
At December 31, 2025, the Company had a federal net operating loss (“NOL”) carryforward and research and experimental credit carryforward of $97.3 million and $10.4 million, respectively. The federal NOL carryforward is indefinite-lived, and the research and experimental credit carryforward expires in 2045. At December 31, 2025, the Company had state NOL carryforwards and research and experimental credit carryforwards of $21.5 million and $4.3 million, respectively. State NOL carryforwards were comprised of $11.1 million and $10.0 million related to Louisiana and New Mexico, respectively. The Louisiana NOL carryforwards are fully offset by a valuation allowance, and the New Mexico NOL carryforward expires in 2045. The state research and experimental credit carryforwards all relate to Texas and begin expiring in 2038.
The current income tax provision and the deferred income tax provision for the years ended December 31, 2025, 2024 and 2023 were comprised of the following (in thousands).
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Current income tax provision | ||||||||||||||||||||
| Federal | $ | 6,192 | $ | 21,296 | $ | 1,554 | ||||||||||||||
| State | 896 | 5,763 | 12,368 | |||||||||||||||||
| Total current income tax provision | $ | 7,088 | $ | 27,059 | $ | 13,922 | ||||||||||||||
| Deferred income tax provision (benefit) | ||||||||||||||||||||
| Federal | $ | 187,881 | $ | 221,356 | $ | 145,711 | ||||||||||||||
| State | (22,294) | 43,949 | 26,393 | |||||||||||||||||
| Total deferred income tax provision | $ | 165,587 | $ | 265,305 | $ | 172,104 | ||||||||||||||
| Total income tax provision (benefit) | ||||||||||||||||||||
| Federal | $ | 194,073 | 242,652 | 147,265 | ||||||||||||||||
| State | (21,398) | 49,712 | 38,761 | |||||||||||||||||
| Total income tax provision | $ | 172,675 | $ | 292,364 | $ | 186,026 | ||||||||||||||
Reconciliations of expected income tax expense and reported income tax expense on income before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands).
| Year Ended December 31, | |||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||
| US federal statutory income tax rate | $ | 217,558 | 21.00 | % | $ | 265,379 | 21.00 | % | $ | 230,241 | 21.00 | % | |||||||||||||||||
| Federal | |||||||||||||||||||||||||||||
| Non-controlling interest in subsidiaries | (21,325) | (2.06) | % | (18,064) | (1.43) | % | (13,500) | (1.23) | % | ||||||||||||||||||||
| Research and experimental tax credits | (11,545) | (1.11) | % | 1,504 | 0.12 | % | (102,330) | (9.33) | % | ||||||||||||||||||||
| Other nontaxable and nondeductible items | 5,922 | 0.57 | % | (3,931) | (0.31) | % | 3,558 | 0.32 | % | ||||||||||||||||||||
State income tax (benefit) expense(1) | (21,398) | (2.06) | % | 47,927 | 3.79 | % | 37,358 | 3.41 | % | ||||||||||||||||||||
| Change in reserve on uncertain tax positions | 3,463 | 0.33 | % | (451) | (0.04) | % | 30,699 | 2.80 | % | ||||||||||||||||||||
| Total income tax provision | $ | 172,675 | 16.67 | % | $ | 292,364 | 23.13 | % | $ | 186,026 | 16.97 | % | |||||||||||||||||
__________________
(1)For the years ended December 31, 2025, 2024 and 2023, the state income tax (benefit) expense was primarily related to the State of New Mexico.
The Company did not have any reconciling items related to changes in tax laws or rates enacted in the current period.
The Company files a United States federal income tax return and several state tax returns, a number of which remain open for examination. The earliest tax year open for examination for the federal, the State of New Mexico and the State of Louisiana tax returns is 2022. The earliest tax year open for examination for the State of Texas tax return is 2021.
As of December 31, 2025, 2024 and 2023, the Company had unrecognized tax benefits (“UTB”) of $37.8 million, $34.3 million and $35.3 million, respectively, as a result of research and experimental expenditures, which would reduce the Company’s effective tax rate in future periods if and when realized. As of December 31, 2025, 2024 and 2023, $31.5 million, $31.1 million and $27.0 million, respectively, of the Company’s UTBs were recorded as other long-term liabilities on the consolidated balance sheets.
Reconciliations of UTBs for the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands).
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Balance at beginning of period | $ | 34,335 | $ | 35,336 | $ | — | ||||||||||||||
| Additions for tax positions of current period | 3,111 | 2,745 | 35,336 | |||||||||||||||||
| Adjustment for tax positions of prior periods | 352 | (3,746) | — | |||||||||||||||||
Balance at end of period(1) | $ | 37,798 | $ | 34,335 | $ | 35,336 | ||||||||||||||
__________________
(1)At December 31, 2025, 2024 and 2023, the UTBs related to U.S. federal taxes were $33.7 million, $30.2 million and $30.7 million, respectively. At each of December 31, 2025 and 2024, the UTBs related to state of Texas taxes were $4.1 million. At December 31, 2023, the UTBs related to state of Texas taxes were $4.6 million.
The Company’s cash paid for income taxes, net of refunds received during the years ended December 31, 2025, 2024 and 2023 are as follows (in thousands).
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Federal | $ | 43,000 | $ | 22,622 | $ | (8,864) | ||||||||||||||
| State | ||||||||||||||||||||
| New Mexico | 7,500 | 7,200 | 13,284 | |||||||||||||||||
| Other | — | 182 | 177 | |||||||||||||||||
| Total cash paid for income taxes, net of refunds received | $ | 50,500 | $ | 30,004 | $ | 4,597 | ||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 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.