Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.22.1
Income Taxes
 3 Months Ended
Mar. 31, 2022
Income Taxes [Abstract]  
Income Taxes 15. INCOME TAXES

VAALCO and its domestic subsidiaries file a consolidated U.S. income tax return. Certain foreign subsidiaries also file tax returns in their respective local jurisdictions.

Income taxes attributable to continuing operations for the three months ended March 31, 2022, and 2021 are attributable to foreign taxes payable in Gabon as well as income taxes in the U.S.

Provision for income taxes related to income from continuing operations consists of the following:

Three Months Ended March 31,

2022

2021

U.S. Federal:

(in thousands)

Current

$

—

$

—

Deferred

(12,486)

(2,153)

Foreign:

Current

5,691

3,435

Deferred

2,167

1,804

Total

$

(4,628)

$

3,086

The Company’s effective tax rate for the three months ended March 31, 2022 and 2021, excluding the impact of discrete items, was 67.9% and (64%), respectively. For the three months ended March 31, 2022, the Company’s overall effective tax rate was impacted by non-deductible items associated with operations, and a change in valuation allowance. The total tax expense for the three months ended March 31, 2022 includes a discrete adjustment for the release of $12.7 million of valuation allowance as a result of an increase in forecasted future earnings. For the three months ended March 31, 2022, the current tax expense of $ 5.7 million includes a $3.1 million unfavorable oil price adjustment as a result of the change in value of the government of Gabon’s allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding the impact, current income taxes were $2.6 million for the period. For the three months ended March 31, 2021, the current tax expense of $3.4 million includes a $0.5 million unfavorable oil price adjustment as a result of the change in value of the government of Gabon’s allocation of Profit Oil between the time it was produced and the time it was taken in-kind. After excluding the impact, current income taxes were $2.9 million for the period.

As of March 31, 2022, the Company had no material uncertain tax positions. The Company’s policy is to recognize potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.


‎