Marathon Oil Corporation (MRO), Exxon Mobil Corporation (XOM): Big Oil Takes Advantage of a Major Tax Break

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It should come as no surprise that the three companies that proposed and advocated for this rule change — Exxon Mobil Corporation (NYSE:XOM)ConocoPhillips (NYSE:COP), and BP plc (ADR) (NYSE:BP) — have all made significant changes to their oil exploration plans immediately following the passing of the new tax rules. The most obvious example of this was ConocoPhillips (NYSE:COP). On April 10, the company said it would halt oil exploration in Alaska’s Chuckchi Sea citing bad economics. Then, on April 17, two days after the new tax structure was implemented, the company announced it was planning to boost production in the Kuparuk and Prudhoe Bay regions.

Most recently, BP plc (ADR) (NYSE:BP) announced that it would be investing $1 billion over the next five years and that it will have two new drilling rigs in the Alaskan North Slope by 2016. It has also said that it is in discussion with both ConocoPhillips (NYSE:COP) and Exxon Mobil Corporation (NYSE:XOM) to start a $3 billion exploration project in the Prudhoe Bay region.

Of all the major oil companies in the Alaskan North Slope, only Marathon Oil Corporation (NYSE:MRO) and Royal Dutch Shell plc (ADR) (NYSE:RDS.B) seem to be sticking to their guns when it comes to saying no to expanded Alaskan operations. Royal Dutch Shell plc (ADR) (NYSE:RDS.B)’s decision is more based on its bad press related to a drill ship grounding and other operational woes rather than the tax structure in the state, though.

What a Fool believes
The debate on oil taxes in Alaska may not be over. Several opponents are planning to get a referendum put on the state ballot for 2014 to repeal the tax changes. Many opponents are claiming that this tax cut would lead to large budget deficits for the state. For now, however, oil companies are going to take as much advantage as they can with this newfound tax break.

The article Big Oil Takes Advantage of a Major Tax Break originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe has no position in any stocks mentioned, and neither does The Motley Fool. You can follow Tyler at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter @TylerCroweFool.

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