8.  Income Taxes

Our income tax benefit for the three and six months ended June 30, 2016 was $35.7 million and $40.6 million, respectively.  The annualized effective tax rate for the three and six months ended June 30, 2016 was 22.8% and 11.5%, respectively.  Our income tax benefit for the three and six months ended June 30, 2015 was $44.1 million and $147.7 million, respectively.  The annualized effective tax rate for the three and six months ended June 30, 2015 was 14.5% and 22.3%, respectively.  Our annualized effective tax rates differ from the federal statutory rate of 35.0% for all periods presented primarily due to recording and adjusting a valuation allowance for our deferred tax assets.         

 During the three months and six ended June 30, 2016, we recorded a valuation allowance of $22.3 million and $82.2 million, respectively, related to federal and state deferred tax assets.  During the three and six months ended June 30, 2015, we recorded a valuation allowance of $62.9 million and $85.4 million, respectively.  Deferred tax assets are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce tax deductions in future periods.  The realization of these assets depends on recognition of sufficient future taxable income in specific tax jurisdictions in which those temporary differences or net operating losses are deductible.  In addition, the realization depends on the ability to carryback certain items to prior years for refunds of taxes previously paid.  In assessing the need for a valuation allowance on our deferred tax assets, we consider whether it is more likely than not that some portion or all of them will not be realized.  As of June 30, 2016 and December 31, 2015, we had a valuation allowance related to Federal, Louisiana and Alabama net operating losses and other deferred taxes.  The tax years 2012 through 2015 remain open to examination by the tax jurisdictions to which we are subject.   

As of June 30, 2016, we recorded a current income tax receivable of $5.6 million and non-current income tax receivables of $52.1 million.  For the current income tax receivable, the amount is comprised principally of a net operating loss (“NOL”) claim for 2015 carried back to 2005 filed on Form 1139, Corporation Application for Tentative Refund.  For the net amount classified as non-current income tax receivables, our NOL claims for the years 2012, 2013 and 2014 were carried back to the years 2003, 2004, 2007, 2010 and 2011 filed on Form 1120X, U.S. Corporation Income Tax Return.  These carryback claims are made pursuant to Internal Revenue Code (“IRC”) Section 172(f) which permits certain platform dismantlement, well abandonment and site clearance costs to be carried back 10 years.  The refund claims filed on Form 1120X will require a review by the Congressional Joint Committee on Taxation and are accordingly classified as non-current.

We recognize interest and penalties related to unrecognized tax benefits in income tax expense.  During the 2016 and 2015 periods reported, we recorded immaterial amounts of accrued interest expense related to our unrecognized tax benefit.