Trump Tax Bill is Good for Upstream Oil & Gas

[dan_s]

Forbes: The Final Trump Tax Bill: A Clear Net Positive For U.S. Oil And Gas.

For the oil and natural gas industry, what is the impact of the new tax bill just passed by congress?

As for most other American businesses, the bill is a mixed bag of lowered tax rates and limited deductions, but at the end of the day, it appears to be a net positive. Here's why: Tax Rates are lowered - This one's rather obvious. Lowering the corporate rate from 35% to 21%, and lowering all personal marginal rates will clearly benefit everyone involved in the oil and gas industry from a tax standpoint. Not much more needs to be said there.

The option to expense Intangible Drilling Costs is retained - This century-old tax treatment was the number one issue for the upstream independents who produce the lion's share of oil and gas in the U.S. today. The industry's lobby and upstream trade associations have worked overtime for the last eight years to educate members of congress about how critical this tax provision is to the ability of this very capital-intensive industry to raise the capital necessary to keep drilling. Those efforts paid off in the end, as this key provision was retained in the final bill.
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My opinion is that the FEAR that the Intangible Drilling Cost deduction would be lost was a major issue holding down the share prices of our upstream companies. - Dan

[dan_s]

Here is a (very long) link to a summary of how the new tax bill will impact oil & gas companies. Overall, it is extremely positive.

https://www.bdo.com/insights/industries ... on-oil-gas