“Forbes names ExxonMobil green company of the year.” That, or something very similar, is a recent headline on thousands of Web sites and blogs.
Did we miss one of Forbes magazine’s lists, I asked myself as I perused stories and comments via my Google Exxon alerts.
I couldn’t find a green company list on Forbes’ Web site. Or anywhere else.
What I did find was a cover story by Christopher Helman that was posted to Forbes’ Web site on Aug. 5, and published in the Aug. 24 print edition of the magazine, titled “ExxonMobil: Green Company of the Year.”
The story, which was very interesting, appears to be fact-based; its provocative headline likely the source of misunderstanding.
Still, a lot of journalists and Internet writers and bloggers didn’t bother to verify whether there was a green company list with Exxon’s name at the top.
And if they actually read Helman’s article, they would know it was not about a list.
Forbes Editor William Baldwin’s comments about the article (in a Forbes opinion piece that also did not mention a list) added fuel to the fire by calling Exxon chief Rex Tillerson a “hero,” making for some very unhappy environmentalists.
You can read the article at www.forbes.com/forbes/2009/0824/energy-oil-exxonmobil-green-company-of-year.html. (It carries a link to Baldwin’s comments.)
FYI—In a Sept. 10 phone conversation, Helman confirmed there was no list.
—Kay Cashman
Profit per barrel must top $340 before ACES takes 75%
A mid-August article in Petroleum News contained a quote that said the State of Alaska’s take under its new production tax could be as high as 80 percent of an oil company’s net profits, depending on the price of oil at the time the tax was assessed.
The quote was from an oil company executive, but it was from the period of time just before Alaska’s Clear and Equitable Share, commonly known as ACES, passed the Alaska Legislature in late 2007. The final tax bill was slightly different from the version the executive commented on, and although he is no longer working in Alaska, his firm’s position on ACES remains negative.
Petroleum News had asked Cody Rice, a petroleum economist in the Alaska Department of Revenue’s Tax Division, to comment on the quote but it was a last minute request, so his response didn’t make it in time for the article.
Rice’s e-mailed response, which arrived Aug. 27, after being cleared with his superiors for accuracy, said the “highest tax rate under ACES is 75 percent of net profits,” but that rate can only be reached when the “net profit per barrel of oil is $342.50.”
Tax rates under ACES depend on production rates, oil prices and the cost of production, Rice said.
“Depending on the level of expenditure necessary to develop a field, the company making the investment can see their total taxes either increase or decrease as a result of their investments,” he said, using BP’s offshore Liberty field, which sits in federal waters, as an example.
“A company developing a field on state land similar to Liberty would receive a minimum production tax deduction of 25 percent and a capital credit of 20 percent of all capital costs incurred to develop the field, regardless of whether production had yet begun from the Liberty-like field,” Rice said.
The 45 percent credit, “an offset against tax liability,” would “likely decrease a company’s tax liability in the early years when investment is being made and production either has not begun or is just beginning from the new field,” he said.
What’s the least amount of its net profit on a barrel of oil that an oil company has to pay the State of Alaska under ACES?
“Ignoring the minimum tax for the purposes of this discussion, the lowest base tax rate under ACES is 25 percent of net profits, and this rate could be applicable when prices are $9 or $150, depending on the company’s mix of oil and gas investments, and its cost to produce that oil or gas,” Rice said.
—Kay Cashman
