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This is a great article that states that Chevron's acquisition of Hess unlocks a previously overlooked tax benefit worth $15 billion. This windfall stems from a provision introduced in the 1918 Revenue Act, which allows corporations to offset future tax liabilities by utilizing past losses. However, this benefit only materializes when a company generates sufficient profits to incur substantial tax obligations. By merging with Hess, Chevron gains access to a trove of past losses that can be used to reduce its future tax burden, thereby saving a significant amount of money. #oilgas #oilandgas #mergersandacquisitions #accounting
Tony Kenck
1 年
This is a tax loss carry forward combined with tax consolidation. Oil companies bled cash from 2015 through 2021, they are now in a position to start deducting those losses. This benefit is extended to all US companies, so it’s not just an oil company thing. I’m confident that Hess was quite aware of the losses and priced those in.
Chris Wimmer
1 年
Chevron does not have dummies working for them. M&A is a very strategic business. Summed up in one word. Smart.
Neil Delfino
12 个月
More net cash flow to Chevron means more dividends for us share owners. The government will extract the tax from us, in the end. Remember that many of us retired from Chevron depend on our quarterly dividends to live on.
Byron Veilleux
12 个月
Tax pools and their position in Guyana. A no brainer
Joshua Turner
1 年
Exxon style recognition of a tax opportunity!
John Richey
1 年
Awesome!
Managing Director
1 年Whilst sounding unethical, these rules exist to support investment going forward on projects. Chevron would largely have to invest capital into these assets to realise benefit out of tax losses. Hess was big in shale and in offshore Guyana and these projects are ramping up and hence the tax losses carried forward in capital and future capital requirements. It’s a smart acquisition at good value.