Vitesse Energy, Inc.VTS
Vitesse Energy, Inc. Income Taxes Disclosure
Income Taxes
Prior to the Spin Off, Vitesse Energy and Vitesse Oil have been treated as a partnership for U.S. federal applicable state and local income tax purposes. As partnerships, Vitesse Energy and Vitesse Oil were not subject to U.S. federal and certain state and local income taxes, and any taxable income or loss generated by Vitesse Energy and Vitesse Oil was passed through to and included in the taxable income or loss of its members. Following the Spin-Off, the Company is now subject to U.S. federal and applicable state and local income taxes for taxable income or loss.
For the years ended December 31, 2025, 2024 and 2023, the Company recorded a federal and state tax deferred expense of $9.8 million, $7.7 million and $61.9 million, respectively. In January 2023 the Predecessor was contributed into Vitesse resulting in a change in tax status and the recording of $44.1 million federal and state deferred tax expense. In addition, a $2.4 million deferred tax liability was recorded in 2023 related to the acquisition of Vitesse Oil.
FOR THE YEARS ENDED DECEMBER 31, | |||||||||||||||||
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Income before income taxes: | |||||||||||||||||
United States | $ | 35,393 | $ | 28,732 | $ | 42,202 | |||||||||||
Foreign | (318) | — | — | ||||||||||||||
Total income before income taxes | $ | 35,075 | $ | 28,732 | $ | 42,202 | |||||||||||
Income tax expenses and benefits included in the consolidated statements of operations are detailed below:
FOR THE YEARS ENDED DECEMBER 31, | |||||||||||||||||
(in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Current taxes: | |||||||||||||||||
Federal | $ | — | $ | — | $ | — | |||||||||||
State | — | — | — | ||||||||||||||
Total current income tax benefit (expense) | $ | — | $ | — | $ | — | |||||||||||
Deferred taxes: | |||||||||||||||||
Federal | $ | (8,933) | $ | (7,110) | $ | (55,687) | |||||||||||
State | (865) | (562) | (6,259) | ||||||||||||||
Total deferred income tax benefit (expense) | $ | (9,798) | $ | (7,672) | $ | (61,946) | |||||||||||
Total income tax benefit (expense) | $ | (9,798) | $ | (7,672) | $ | (61,946) | |||||||||||
A reconciliation of the statutory federal income tax expense, which is calculated at the federal statutory rate of 21% for the years ended December 31, 2025, 2024 and 2023 to the income tax expense from continuing operations provided for the periods presented, is as follows:
FOR THE YEARS ENDED DECEMBER 31, | ||||||||||||||||||||||||||
(amounts in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
Income tax benefit (expense) at the federal statutory rate | $ | (7,366) | 21.0 | % | $ | (6,034) | 21.0 | % | $ | (8,862) | 21.0 | % | ||||||||||||||
State income taxes benefit (expense) - net of federal income tax benefits (1) | (865) | 2.5 | % | (562) | 2.0 | % | (1,801) | 4.3 | % | |||||||||||||||||
Foreign Tax Effects: | ||||||||||||||||||||||||||
Canada: | ||||||||||||||||||||||||||
Statutory tax rate difference and other | 14 | — | % | — | — | % | — | — | % | |||||||||||||||||
Change in valuation allowance | (81) | 0.2 | % | — | — | % | — | — | % | |||||||||||||||||
Nontaxable or nondeductible items: | ||||||||||||||||||||||||||
GAAP and tax differences of Predecessor | — | — | % | — | — | % | (44,118) | 104.5 | % | |||||||||||||||||
Non-deductible stock based compensation | (451) | 1.3 | % | (1,048) | 3.6 | % | (6,148) | 14.6 | % | |||||||||||||||||
Nonamortizable transaction costs | (1,080) | 3.1 | % | — | — | % | — | — | % | |||||||||||||||||
Other | 31 | (0.1) | % | (28) | 0.1 | % | (1,017) | 2.4 | % | |||||||||||||||||
Effective tax rate | $ | (9,798) | 27.9 | % | $ | (7,672) | 26.7 | % | $ | (61,946) | 146.8 | % | ||||||||||||||
(1) The majority of state income tax expense results from North Dakota
The tax effects of temporary differences that give rise to significant positions of the deferred income tax assets and liabilities are presented below:
FOR THE YEARS ENDED DECEMBER 31, | |||||||||||
(in thousands) | 2025 | 2024 | |||||||||
Deferred tax assets: | |||||||||||
Asset retirement obligations | $ | 3,261 | $ | 2,247 | |||||||
Net operating loss | 22,140 | 8,067 | |||||||||
Interest expense | — | 2,892 | |||||||||
Equity-based compensation | 879 | 1,120 | |||||||||
Accrued compensation | 906 | 810 | |||||||||
Lease liability | 1,189 | 1,107 | |||||||||
Other assets | 125 | 1,382 | |||||||||
Total deferred tax assets | $ | 28,500 | $ | 17,625 | |||||||
Deferred tax liabilities: | |||||||||||
Oil and gas properties | $ | (91,423) | $ | (87,743) | |||||||
Derivatives | (3,346) | (869) | |||||||||
Right-of-use assets | $ | (1,013) | $ | (1,014) | |||||||
Total deferred tax liabilities | $ | (95,782) | $ | (89,626) | |||||||
Valuation Allowance | $ | (211) | $ | — | |||||||
Total deferred tax (liability) asset | $ | (67,493) | $ | (72,001) | |||||||
As of December 31, 2025, the Company had $95.7 million and $55.9 million of U.S. federal and state net operating loss carryovers, respectively. Of these amounts, $57.4 million of U.S. federal net operating loss carryovers acquired in connection with the Lucero Acquisition are subject to an IRC §382 annual limitation amount of $7.1 million. In addition, acquired Lucero state net operating losses of $30.2 million are subject to separate return year limitations. U.S. federal net operating loss carryforwards incurred prior to January 1, 2018 of $45.2 million will begin to expire in 2033. U.S. federal net operating loss carryforwards incurred after December 31, 2017 of $50.5 million have no expiration and can only be used to offset 80% of taxable income when utilized. As of December 31, 2024, the Company had $34.6 million and $23.2 million of U.S. federal and state net operating loss carryovers, respectively.
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. Based on when the Company expects existing taxable differences to be realized, management determined that sufficient positive evidence exists as of December 31, 2025 to conclude that it is more-likely-than-not that all of its deferred tax assets will be realized with the exception of those in the Canadian jurisdiction. Of the existing valuation allowance, $0.1 million was recorded as part of the Lucero Acquisition.
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 taxing authority. As of December 31, 2025 and 2024, the Company did not have any accrued liability for uncertain tax positions and does not anticipate recognition of any significant liabilities for uncertain tax positions during the next 12 months. Interest and penalties related to uncertain tax positions are reported in income tax expense.
As of December 31, 2025, the Company has no tax years under audit. The Company remains subject to examination for federal income taxes and state income taxes for tax years 2022 through 2025 and Colorado state taxes for the additional 2021 tax year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 12, 2025 | |
| 2023 | Feb 26, 2024 | |
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.