Annual report pursuant to Section 13 and 15(d)

Income Taxes

v2.4.0.6
Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes
6. INCOME TAXES

 

The Company and its domestic subsidiaries file a consolidated United States income tax return. Certain subsidiaries' operations are also subject to foreign income taxes. Provision for income taxes consists of the following:

                         
(In thousands)    Year Ended December 31,  
     2011      2010      2009  

U.S. Federal:

                           

Current

    $ —         $ —         $ —     

Deferred

      —           —           —     

Foreign:

                           

Current

      93,468         35,260         36,902   

Deferred

      —           —           —     
    

 

 

     

 

 

     

 

 

  

Total

    $ 93,468       $ 35,260       $ 36,902   
    

 

 

     

 

 

     

 

 

  

The primary differences between the financial statement and tax bases of assets and liabilities at December 31, 2011 and 2010 are as follows: (In thousands)

                 
      2011     2010  

Deferred Tax Assets:

                 

Basis difference in fixed assets

    $ 23,821      $ 17,875   

Foreign tax credit carry forward

      57,825        37,950   

Alternative minimum tax credit carryover

      1,349        1,349   

Foreign net operating losses

      22,732        21,842   

Asset retirement obligations

      5,322        4,699   

Other

      1,566        (209 ) 
    

 

 

    

 

 

  
     $ 112,615      $ 83,506   

Valuation allowance

      (111,266 )      (82,157 ) 
    

 

 

    

 

 

  

Total deferred tax asset

    $ 1,349      $ 1,349   
    

 

 

    

 

 

  

The Company's unused foreign tax credit will start to expire between the years 2013 and 2021. The alternative minimum tax credits do not expire, and foreign net operating losses ("NOL") are not subject to expiry dates. The NOL for the Company's UK subsidiary can be carried forward indefinitely, while the NOLs for the Company's Gabon and Angola subsidiaries are included in the respective subsidiaries' cost oil accounts, which will be offset against future taxable revenues.

 

Pretax income (loss) is comprised of the following:

                         
(In Thousands)    Year Ended December 31,  
     2011     2010     2009  

United States

    ($ 16,282 )    ($ 4,129 )    ($ 6,029 ) 

Foreign

      150,312        81,776        38,787   
    

 

 

    

 

 

    

 

 

  
     $ 134,030      $ 77,647      $ 32,758   
    

 

 

    

 

 

    

 

 

  

The statutory rate reconciliation is as follows:

                         
(In Thousands)    Year Ended December 31,  
     2011      2010      2009  

Pre-tax income multiplied by 35%

    $ 46,911       $ 27,176       $ 11,465   

Foreign taxes not offset by U.S. foreign tax credits

      46,557         8,084         25,437   
    

 

 

     

 

 

     

 

 

  

Total income tax

    $ 93,468       $ 35,260       $ 36,902   
    

 

 

     

 

 

     

 

 

  

At December 31, 2011, the Company was subject to foreign and United States federal taxes only, with no allocations made to state and local taxes.

The following table summarizes the activity to the Company's unrecognized tax benefits:

                         
(In Thousands)    Year Ended December 31,  
     2011      2010      2009  

Balances at January 1,

    $ 13,201       $ 13,201       $ 13,201   

Increases related to prior year positions

      0         0         0   
    

 

 

     

 

 

     

 

 

  

Balance at December 31,

    $ 13,201       $ 13,201       $ 13,201   
    

 

 

     

 

 

     

 

 

  

If recognized, none of the uncertain tax positions would impact the effective rate because they would be offset by valuation allowance.

Our accounting policy is to recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense. The Company has no accruals for the payment of interest and penalties.

The following table summarizes the tax years that remain subject to examination by major tax jurisdictions:

         

United States

      2006-2011   

Gabon

      2007-2011