Permian Resources CorpPR
Permian Resources Corp Income Taxes Disclosure
Note 12—Income Taxes
The Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income of OpCo, as well as any stand-alone income generated by the Company. The Company adopted ASU 2023-09 for the period ended December 31, 2025. As prospective adoption was elected by the Company, additional disclosures required under ASU 2023-09, such as the disaggregation of the income tax rate reconciliation and information regarding income taxes paid, are only presented for the year ended December 31, 2025.
Income tax expenses and benefits included in the consolidated statements of operations are detailed below:
| Year Ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current taxes | |||||||||||||||||
| Federal | $ | 178 | $ | 47 | $ | (104) | |||||||||||
| State | (1,399) | 1,276 | 2,893 | ||||||||||||||
Total current tax expense | (1,221) | 1,323 | 2,789 | ||||||||||||||
| Deferred taxes | |||||||||||||||||
| Federal | 254,602 | 281,513 | 132,039 | ||||||||||||||
| State | 30,798 | 17,506 | 21,117 | ||||||||||||||
Total deferred tax expense | 285,400 | 299,019 | 153,156 | ||||||||||||||
| Total income tax expense | $ | 284,179 | $ | 300,342 | $ | 155,945 | |||||||||||
Reconciliations of the statutory federal income tax expense, which are calculated at the federal statutory rate of 21%, to the income tax expense from continuing operations are provided in the tables below:
Year Ended December 31, 2025 | |||||||||||
($ in thousands) | Amount | Percent | |||||||||
| Income tax expense at the U.S. Federal Statutory rate | $ | 290,454 | 21.0 | % | |||||||
State income tax, net of federal income tax effect(1) | 28,605 | 2.1 | % | ||||||||
| Noncontrolling interest in partnership | (32,942) | (2.4) | % | ||||||||
| Tax credits | (90,082) | (6.5) | % | ||||||||
| Nontaxable or nondeductible items | 12,988 | 0.9 | % | ||||||||
| Changes in unrecognized tax benefits | 84,267 | 6.1 | % | ||||||||
| Others adjustments | (9,111) | (0.7) | % | ||||||||
| Income tax expense | $ | 284,179 | 20.5 | % | |||||||
(1) State taxes in New Mexico and Texas make up the majority (greater than 50%) of the tax effect in this category.
Year Ended December 31, | |||||||||||
(in thousands) | 2024 | 2023 | |||||||||
| Income tax expense at the U.S. Federal Statutory rate | $ | 325,679 | $ | 217,486 | |||||||
State income tax, net of federal income tax effect | 20,600 | 18,741 | |||||||||
| Noncontrolling interest in partnership | (55,820) | (83,690) | |||||||||
| Nondeductible stock-based and other compensation | (3,604) | 963 | |||||||||
| Nondeductible expenses and other | 13,487 | 2,445 | |||||||||
| Income tax expense | $ | 300,342 | $ | 155,945 | |||||||
Income taxes (net of refunds) were paid in the following jurisdictions:
Year Ended December 31, 2025 | |||||
(in thousands) | |||||
Federal | $ | 268 | |||
State | (1,080) | ||||
Total Current: | $ | (812) | |||
The tax effects of temporary differences that give rise to significant positions of the deferred income tax assets and liabilities, which are presented net in the line item Deferred income taxes on the Company’s consolidated balance sheet, are presented below:
| (in thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 266,321 | $ | 260,881 | |||||||
Tax credits | 59,255 | — | |||||||||
| Other assets | 268 | 245 | |||||||||
| Total deferred tax assets | 325,844 | 261,126 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Investment in OpCo | (1,219,301) | (863,499) | |||||||||
| Valuation allowance | (6) | (6) | |||||||||
Net deferred tax liability | $ | (893,463) | $ | (602,379) | |||||||
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. OBBBA included multiple provisions applicable to U.S. income taxes for businesses of which those with the most significant impact to the Company include the reinstatement of 100% bonus depreciation for certain capital expenditures and allowing deduction for intangible drilling costs for purposes of computing the corporate alternative minimum tax. The effects of changes in tax law are recognized in the period of enactment, and as a result, OBBBA is currently recognized in the Company’s condensed consolidated financial statements but did not have a material impact on the Company's effective tax rate for the year ended December 31, 2025.
As of December 31, 2025, the Company had approximately $1.2 billion and $216.1 million of U.S. federal and state net operating loss carryovers, respectively. None of the state net operating loss carryover expires and approximately $302.6 million of the U.S. federal net operating loss carryover expires in 2037. In addition, the Company has approximately $56.7 million and $2.6 million of federal and state general business credit carryovers, respectively. The general business credit carryovers will begin to expire in 2044.
The Company periodically assesses whether it is more-likely-than-not that it will generate sufficient taxable income to realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years. The Company is projecting future taxable income exclusive of reversing items. Based upon these earnings and the expected timing of the reversal of its existing taxable temporary differences, management determined it is more-likely-than-not that, with the exception of certain state net operating loss carryovers, the remaining deferred income tax assets existing at December 31, 2025 will be realized.
The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax laws and regulations. The Company gives financial statement recognition to those tax positions that it believes are more-likely-than-not to be sustained upon the examination by the Internal Revenue Service or other governmental agency. As of December 31, 2025, the Company had accrued an unrecognized tax benefits (“UTB”) of $84.3 million, which would reduce the Company’s effective tax rate in future periods if and when recognized. The timing as to when the Company will substantially resolve the uncertainties associated with its UTB is currently unknown. Interest and penalties related to the UTB, if any, are reported in Income tax expense in the consolidated statements of operations. During the year ended December 31, 2025, there were no interest or penalties incurred.
The following table summarizes changes in the balance of the Company’s UTB during the periods presented:
| (in thousands) | December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||
| Balance at beginning of period | $ | — | $ | — | $ | — | |||||||||||
| Additions for tax positions of current period | 56,838 | — | — | ||||||||||||||
Adjustments for tax positions of prior periods | 27,429 | — | — | ||||||||||||||
| Balance at end of period | $ | 84,267 | $ | — | $ | — | |||||||||||
The Company is subject to the following material taxing jurisdictions: U.S., Colorado, New Mexico, and Texas. As of December 31, 2025, the Company has no current tax years under audit. The Company remains subject to examination for federal income taxes and state income taxes for tax years 2021 through 2024.
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 26, 2018 | |
| 2016 | Mar 23, 2017 | |
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.