Quarterly report pursuant to Section 13 or 15(d)

Note 13 - Income Taxes

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Note 13 - Income Taxes
 9 Months Ended
Sep. 30, 2023
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

13. 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.

 

The foreign taxes payable are attributable to Gabon and Egypt for the nine months ended September 30, 2023 and 2022 in addition to domestic income taxes in the U.S.

 

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

 

   

Three Months Ended September 30,

    

Nine Months Ended September 30,

  
   

2023

    

2022

    

2023

    

2022

  

U.S. Federal:

  

(in thousands)

  

Current

   $ —     $ —     $ —     $ —  

Deferred

     1,220       461       2,677       (9,408 )

Foreign:

                                

Current

     26,829       (1,165 )     51,530       24,928  

Deferred

     (2,205 )     23,547       (2,004 )     48,947  

Total

   $ 25,844     $ 22,843     $ 52,203     $ 64,467  

 

The Company’s effective tax rate for the three and nine months ended  September 30, 2023, excluding the impact of discrete items, was 63.85% and 63.57%. For the three and nine months ended September 30, 2022, the effective tax rates were 131.4% and 90.3%. The total tax expense for the three months ended September 30, 2023, includes a discrete amount of $5.4 million primarily related to adjustments made because of changes to oil price (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, i.e., oil price adjustment). For the nine months ended  September 30, 2023, the current tax expense of $51.5 million includes a $8.0 million unfavorable oil price adjustment. After excluding that impact, current income taxes were an expense of $43.5 million for the period. For the three months ended September 30, 2022, the current tax benefit of $1.2 million includes an $8.7 million favorable 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 this impact, current income taxes were $7.5 million for the period. For the nine months ended September 30, 2022, the current tax expense of $24.9 million includes a $4.4 million favorable 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 $29.3 million for the period.

 

As of September 30, 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.