Chesapeake Energy 2014 Annual Report Download - page 107

CHESAPEAKE ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
99
Deferred income taxes are provided to reflect temporary differences in the basis of net assets for income tax and
financial reporting purposes. The tax-effected temporary differences and tax loss carryforwards which comprise deferred
taxes are as follows:
Years Ended December 31,
2014 2013
($ in millions)
Deferred tax liabilities:
Oil and natural gas properties $ (3,950) $ (2,631)
Other property and equipment (14) (371)
Volumetric production payments (920) (1,216)
Contingent convertible debt (443) (439)
Deferred revenue (102) —
Derivative instruments (428) —
Deferred tax liabilities (5,857) (4,657)
Deferred tax assets:
Net operating loss carryforwards (carrybacks) 945 535
Derivative instruments — 108
Asset retirement obligations 165 153
Investments 88 130
Deferred stock compensation 50 66
Accrued liabilities 214 120
Noncontrolling interest liabilities 135 152
Alternative minimum tax credits 34 317
Other 56 40
Deferred tax assets 1,687 1,621
Valuation allowance (222) (148)
Net deferred tax assets 1,465 1,473
Net deferred tax assets (liabilities) $ (4,392) $ (3,184)
Reflected in accompanying balance sheets as:
Current deferred income tax asset — 223
Current deferred income tax liability (207) —
Non-current deferred income tax liability (4,185) (3,407)
Total $ (4,392) $ (3,184)
As of December 31, 2014, Chesapeake had federal income tax NOL carryforwards of approximately $1.6 billion
and state NOL carryforwards of approximately $8.3 billion which excludes the NOL carryforwards related to
unrecognized tax benefits and stock compensation windfalls that have not been recognized under U.S. GAAP. The
associated deferred tax assets related to these NOL carryforwards were $551 million and $394 million, respectively.
Additionally, we had $76 million of alternative minimum tax (AMT) NOL carryforwards, net of unrecognized tax benefits,
available as a deduction against future AMT income. The NOL carryforwards expire from 2031 through 2033. The value
of these carryforwards depends on the ability of Chesapeake to generate taxable income. As of December 31, 2014
and 2013, we had deferred tax assets of $1.687 billion and $1.621 billion, respectively, upon which we had a valuation
allowance of $222 million and $148 million, respectively, for certain state NOL carryforwards and credits that we have
concluded are not more likely than not to be utilized prior to expiration. The net change in the valuation allowance of
$74 million is reflected as a component of income tax expense.