Table of Contents Index to Financial Statements The 2020 tax accrual calculated under the estimated annual effective tax rate method reflects the Tax Reform Act changes that took effect January 1, 2018. The components of the Company’s deferred tax balances as of December 31, 2020 and 2019 were as follows:  As the Tax Reform Act repealed the corporate alternative minimum tax for tax years beginning on or after January 1, 2018 and provided for existing alternative minimum tax credit carryovers to be refunded beginning in 2018, the Company has approximately $30 million in refundable credits. Accordingly, in 2017 the valuation allowance in place prior to the Tax Reform Act related to these credits was released, and any credits remaining were reclassed to a receivable. Additionally, in January 2020 the IRS announced that any previously sequestered amounts relating to these alternative minimum tax refunds would also be refunded. The Company had approximately $2 million in sequestered amounts relating to alternative minimum tax refunds. All of those refunds have been received as of December 2020 after the CARES Act (enacted in March 2020) accelerated alternative minimum tax refunds. In 2020, the Company received refunds related to federal income tax of $32 million. The Company received a refund of $1 million in state income tax in 2019 and paid $6.3 million in state income tax in 2018. The Company’s net operating loss carryforward as of December 31, 2020 was $4.5 billion and $2 billion for federal and state reporting purposes, respectively, the majority of which will expire between 2035 and 2039. Included in the Company's net operating loss carryforward are the net operating loss carryforwards acquired in the Montage acquisition of $1 billion. A portion of the Montage-related net operating loss carryovers are subject to an annual section 382 limitation of $1.7 million, and the Company has appropriately accounted for this limitation in purchase accounting. In addition, certain net operating loss carryovers are subject to a section 382 limitation of $90 million, but the Company does not expect this limit to have a material impact on its net operating loss carryforward balance. Additionally, the Company has an income tax net operating loss carryforward related to its Canadian operations of $29 million, with expiration dates of 2030 through 2039. The Company also had a statutory depletion carryforward of $13 million and $55 million related to interest deduction carryforward as of December 31, 2020. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized. To assess that likelihood, the Company uses estimates and judgment regarding future taxable income, and considers the tax consequences in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities, and tax planning strategies as well as current and forecasted business economics of the oil and gas industry. 110 (in millions) 2020 2019 Deferred tax liabilities: Differences between book and tax basis of property $ —  $ 312  Derivative activity —  34  Right of use lease asset 38  37  Other 2  2  40  385  Deferred tax assets: Differences between book and tax basis of property 295  —  Accrued compensation 38  33  Accrued pension costs 11  9  Asset retirement obligations 20  13  Net operating loss carryforward 1,117  769  Future lease payments 38  37  Derivative activity 9  —  Capital loss carryover 27  —  Other 24  18  1,579  879  Valuation allowance (1,539) (87) Net deferred tax asset $ —  $ 407  The Tax Reform Act made significant changes to the U.S. federal income tax law affecting the Company. Major changes in this legislation applicable to the Company relate to the reduction in the corporate tax rate to 21%, repeal of the alternative minimum tax, interest deductibility and net operating loss carryforward limitations, changes to certain executive compensation and full expensing provisions related to business assets. The adjustments required to deferred taxes as a result of the Tax Reform Act have been reflected in the Company’s tax provision. 