Quarterly report pursuant to Section 13 or 15(d)

Note 16 - Income Taxes

v3.23.1
Note 16 - Income Taxes
 3 Months Ended
Mar. 31, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

16. 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 that include Canada, Egypt, Equatorial Guinea and Gabon.

 

Income taxes attributable to continuing operations for the three months ended March 31, 2023 and 2022 are attributable to foreign taxes payable in Gabon and Egypt, 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,

  
   

2023

    

2022

  

U.S. Federal:

  

(in thousands)

  

Current

   $ —     $ —  

Deferred

     586       (12,486 )

Foreign:

                

Current

     12,300       5,691  

Deferred

     1,885       2,167  

Total

   $ 14,771     $ (4,628 )

 

The Company’s effective tax rate for the three months ended March 31, 2023 and 2022, excluding the impact of discrete items, was 60.96% and 67.9%, respectively. The total tax expense for the three months ended March 31, 2023, includes a discrete amount of $4.6 million primarily related to adjustments made as a result of changes to oil price adjustments. For the three months ended March 31, 2023, the current tax expense of $12.3 million includes a $3.2 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 that impact, current income taxes were an expense of $9.1 million for the period. 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

 

As of March 31, 2023, 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.