W&T Offshore, Inc. Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Components of income tax expense were as follows (in thousands):

The reconciliation of income taxes computed at the U.S. federal statutory tax rate to our income tax expense is as follows (in thousands):


	Year Ended December 31,
	2012				2011					2010
Income tax expense at the federal statutory rate	$	41,836	35.0	%	$	92,517		35.0	%	$	45,427		35.0	%
Valuation allowance		—	—			—		—			(31,985	)	(24.6	)
Domestic production activities adjustment		4,256	3.5			(1,823	)	(0.7	)		(2,623	)	(2.0	)
State income taxes		750	0.6			603		0.2			32		—
Other		705	0.7			220		0.1			1,050		0.8

	$	47,547	39.8	%	$	91,517		34.6	%	$	11,901		9.2	%

Significant components of our deferred tax assets and liabilities were as follows (in thousands):


	December 31,
	2012			2011
Deferred tax liabilities:
Property and equipment	$	186,599		$	63,328
Other		4,822			4,707

Total deferred tax liabilities		191,421			68,035

Deferred tax assets:
Minimum tax credit		22,314			—
Federal net operating losses		12,389			—
State net operating losses		5,057			4,626
Derivatives		3,312			1,096
Valuation allowance (state)		(4,674	)		(4,626	)
Accrued cash-based bonus		2,455			5,390
Stock-based compensation		4,256			3,971
Other		1,330			704

Total deferred tax assets		46,439			11,161

Net deferred tax liabilities	$	144,982		$	56,874

The table below presents the details of our net operating loss and tax credit carryovers as of December 31, 2012 (in thousands):

Balances and changes in the uncertain tax positions are as follows (in thousands):


	December 31,
	2012		2011
Balance at beginning of period		—	$	3,558
(Decreases) related to prior-year tax positions		—		(3,558	)

Balance at end of period		—	$	—