Jan. 2 (UPI) -- British energy company BP said Tuesday its after-tax earnings from the United States would be supported by the 14 percent cut in the corporate tax rate.
The British energy company said its after-tax earnings would be supported by a provision in the U.S. corporate tax overhaul, which dropped from 35 percent to 21 percent as of Jan. 1.
"The ultimate impact of the change in the U.S. corporate income tax rate is subject to a number of complex provisions in the legislation which BP is reviewing," the company said in a statement.
Lowering the tax rate means BP has to revalue some of its liabilities. In its statement for the fourth quarter, due Feb. 6, the company said it expects a $1.5 billion one-off non-cash charge from the U.S. corporate income tax reduction.
For smaller energy companies and independent producers, the Texas Alliance of Energy Producers In a statement emailed to UPI said two provisions -- the percentage depletion allowance and the expensing of intangible drilling costs - meant they could stay competitive.
Without the tax provisions, the trade group said estimated oil and gas related activity would drop by as much as 30 percent, leading to a decline in employment. The Federal Reserve Bank of Dallas estimates Texas accounts for 54 percent of total U.S. oil and gas employment.
The tax overhaul, passed along party lines with no Democrats in support, contains several provisions that favor oil and gas companies. U.S. Sens. Lisa Murkowski, an Alaska Republican, inserted language that calls for two lease sales for oil and gas drillers over the next 10 year in the so-called 1002 Area of the Arctic National Wildlife Refuge in Alaska.
For the third quarter, BP reported its underlying replacement cost profit, a metric used to reflect net profit, of $1.87 billion. Spending during the third quarter was up 14 percent from the same period to $4 billion.
Brent crude oil started 2018 near $67 per barrel.