Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The income tax provision charged to operations for the years ended December 31, 2025, 2024, and 2023 was as follows (in thousands):
Years Ended December 31,
  2025 2024 2023
Current:
U.S. federal $ 118,700  $ 116,323  $ 106,721 
State and local 3,698  3,934  3,796 
Current income tax expense 122,398  120,257  110,517 
Deferred expense:
U.S. federal 6,546  4,530  964 
State and local 9  74  435 
Deferred income tax expense 6,555  4,604  1,399 
Total income tax expense $ 128,953  $ 124,861  $ 111,916 

Total income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 21% for the years ended December 31, 2025, 2024, and 2023 to income before federal income taxes as a result of the following (in thousands, except percentages):
Years Ended December 31,
  2025 2024 2023
Computed tax expense at the statutory rate of 21% $ 128,169  21.0  % $ 121,552  21.0  % $ 108,688  21.0  %
Reduction in income taxes resulting from:
State and local income taxes, net of federal benefit (1)
2,930  0.5  % 3,182  0.5  % 3,439  0.7  %
Tax credits (1,857) (0.3) % (850) (0.1) % —  —  %
Nondeductible and nontaxable items (289) (0.1) % 977  0.2  % (211) (0.1) %
Total income tax expense $ 128,953  21.1  % $ 124,861  21.6  % $ 111,916  21.6  %
(1)Primarily related to income taxes imposed by the State of Texas.
Nondeductible and nontaxable items primarily consist of statutory depletion, prior-year tax adjustments, penalties and interest, and other permanent differences. The Company had no material changes in valuation allowances, unrecognized tax benefits, foreign tax effects, cross-border tax laws, or enacted tax law changes impacting the effective tax rate during the periods presented.

Total income taxes paid (net of refunds received) for the year ended December 31, 2025, 2024, and 2023 were as follows (in thousands):
Years Ended December 31,
  2025 2024 2023
U.S. federal $ 123,000  $ 117,000  $ 100,538 
State and local 3,955  3,669  3,541 
Total income taxes paid (net of refunds received) $ 126,955  $ 120,669  $ 104,079 

Income taxes paid (net of refunds received) were principally attributable to U.S. federal income taxes. No individual state jurisdiction accounted for 5% or more of the total income taxes paid in the periods presented.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (in thousands):
  December 31, 2025 December 31, 2024
Unearned revenue $ 8,821  $ 5,879 
Stock compensation 2,976  2,677 
Right of use lease liabilities 3,739  263 
Other 260  515 
Total deferred tax assets 15,796  9,334 
Real estate and royalty interests 35,405  33,581 
Property, plant and equipment 23,482  20,724 
Capitalized research and development cost 5,905  — 
Pension plan asset 2,235  1,901 
Right of use assets 2,876  244 
Other, net —  285 
Total deferred tax liabilities 69,903  56,735 
Deferred taxes payable $ (54,107) $ (47,401)

One Big Beautiful Bill Act

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. The provisions of the OBBBA impacting the Company primarily related to accelerated depreciation and immediate expensing of capitalized research and development costs. The OBBBA did not have a material impact on our annual effective tax rate in 2025.

Unrecognized Tax Benefits and Open Tax Years

The Company is subject to taxation in the United States, Texas, and New Mexico. The Company is no longer subject to U.S. federal income tax examinations for tax years prior to 2022.

The Company had no material unrecognized tax benefits as of December 31, 2025 or 2024. Accordingly, changes in unrecognized tax benefits did not have a material impact on the Company’s effective tax rate during the periods presented.