Cobalt International Energy, Inc.
Notes to Consolidated Financial Statements (Continued)
16. Income Taxes (Continued)
purposes. The significant components of the Company’s deferred tax assets and liabilities were as
follows:
As of December 31,
2014
2013
($ in thousands)
Short-term deferred tax liabilities:
2.625% convertible senior notes due 2019(1) . . . . . . . . . . . $ 18,479 $ 17,061
3.125% convertible senior notes due 2024(1) . . . . . . . . . . .
11,855
—
Total short-term deferred tax liabilities . . . . . . . . . . . .
30,334
17,061
Long-term deferred tax liabilities:
2.625% convertible senior notes due 2019 . . . . . . . . . . . . . $ 85,471 $ 103,951
3.125% convertible senior notes due 2024 . . . . . . . . . . . . .
148,507
—
Oil and gas properties . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,461
22,135
Total long-term deferred tax liabilities . . . . . . . . . . . .
288,439 126,086
Long-term deferred tax assets:
Seismic and exploration costs . . . . . . . . . . . . . . . . . . . . . .
457,854 280,095
Stock based compensation . . . . . . . . . . . . . . . . . . . . . . . .
18,092
20,842
Domestic NOL carry forwards . . . . . . . . . . . . . . . . . . . . .
415,608 273,163
Foreign NOL carry forwards . . . . . . . . . . . . . . . . . . . . . .
38,200
28,633
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(43,021)
1,976
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(567,960) (461,562)
Total long-term deferred assets . . . . . . . . . . . . . . . . .
318,773 143,147
Net long-term deferred assets . . . . . . . . . . . . . . . . . . . .
30,334
17,061
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
—
(1) The recognition of the liability and equity components of the debt resulted in a taxable
temporary basis difference and recorded as an adjustment to additional paid-in capital.
The Company has established a full valuation allowance against the deferred tax assets where the
Company has determined that it is more likely than not that all of the deferred tax assets will not be
realized. Because of the full valuation allowance, no income tax expense or benefit is reflected on the
consolidated statement of operations for years ended December 31, 2014, 2013 and 2012.
The NOL carryforward for federal and state income tax purposes of approximately $1.2 billion and
$65.2 million as of December 31, 2014 begins to expire in 2025 and 2024, respectively. The utilization
of the NOL carryforwards is dependent upon generating sufficient future taxable income in the
appropriate jurisdictions within the carryforward period.
As of December 31, 2014, the Company had NOL carryforward for foreign income tax purposes of
approximately $73.8 million which begins to expire in 2014. The Company has determined that it is
more likely than not, that the foreign NOLs will not be fully realized. Therefore, a full valuation
allowance was established for these net deferred tax assets.
F-35
