These 14 US Big Oil & Gas Corps generated US Generally Accepted Accepted Accounting Principles (GAAP) Total Pretax Income in the 1Q 2013 of $38,386 mil, which was down 10.5% from the $42,894 mil earned in the 1Q 2012.
On the other hand, these same 14 US Big Oil & Gas Corps generated GAAP Total After-tax Net Income which was down by a substantially lower 2.4% in the 1Q 2013 as compared with the 1Q 2012.
So, what's up with the 8.1% positive earnings spread from the down 10.5% Pretax Income in the 1Q 2013 to the down 2.4% After-tax Net Income in the 1Q 2013?
Well, it's all about the effective income tax rate and financial engineering.
In total, these 14 US Big Oil & Gas Corps slashed their effective income tax rates on a book basis from 42.9% of Pretax Income in the 1Q 2012 to 37.7% in the 1Q 2013. The reported effective income tax rates of the largest US Big Oil & Gas Corps are higher than that of US Corps in Other Sectors because these largest US Big Oil & Gas Corps appear to include some of the royalties paid to foreign countries to extract natural resources as foreign income tax expense, rather than as royalty expense.
Having the US Big Oil & Gas Sector generating a total decline of 10.5% in Pretax earnings in the 1Q 2013 is not good for the US economy. And it also is not good for US job creation in this key US sector. The key question is that, given these poor operating results, just how much shedding of US jobs will there be in this key US Big Oil & Gas Sector.
So, how does the US Congress react to this poor 1Q 2013 quarter for the key US Big Oil & Gas Sector? Well, they flee Washington DC.
It is pretty clear that substantial fiscal stimulus to the US economy has been needed for quite some time. So how has the US Congress responded? Now granted the Obama Administration should have been bolder and more creative, but the US Congress has rejected nearly every recommendation made by the Obama Administration to spur the US economy and US job creation.
And so what has the US Congress done instead? They passed an immediate severe austerity Sequester which substantially harms US economic growth, US job creation, the profits of these US Big Oil & Gas Corps, of US Health Care Corps, of US Manufacturers, of US Technology Corps, and of the huge Dow Industrial Corps.
And what is the intellectual foundation that the US Congress used to pass this immediate severe austerity Sequester, which results in a substantial reduction in US jobs and US economic growth? An economic study by two Harvard professors which concludes that when the US debt level is 90% of US GDP, that as if by magic, GDP growth drops dramatically.
And now that it has been proven that this economic study is clearly erroneous, how does the US Congress react to the complete collapse of the intellectual foundation of their immediate severe austerity Sequester initiative? By ignoring its collapse.
Below here is the GAAP Pretax Income, GAAP Income Tax Expense, and GAAP Effective Income Tax Rates on a book basis for both the calendar 1Q 2013 as well as the 1Q 2012 for each of these 14 US Big Oil & Gas Corps:
| 1Q 2013 | 1Q 2012 | GAAP | ||||||||
| 1Q 2013 | GAAP | 1Q 2012 | GAAP | GAAP | Combined | |||||
| 1Q 2013 | GAAP | Effective | 1Q 2012 | GAAP | Effective | Pretax | Net | |||
| GAAP | Income | Income | GAAP | Income | Income | Income | Income | |||
| Pretax | Tax | Tax | Pretax | Tax | Tax | Increase | Increase | |||
| Income | Expense | Rate | Income | Expense | Rate | (Decrease) | (Decrease) | |||
| mil $s | mil $s | mil $s | mil $s | mil $s | mil $s | |||||
| US Big Oil & Gas Corps | ||||||||||
| ExxonMobil | 16,038 | 6,277 | 39.1% | 17,515 | 7,716 | 44.1% | (1,477) | (38) | ||
| Chevron | 10,283 | 4,044 | 39.3% | 12,069 | 5,570 | 46.2% | (1,786) | (260) | ||
| ConocoPhillips | 3,787 | 1,763 | 46.6% | 4,265 | 2,086 | 48.9% | (478) | (155) | ||
| Occidental Petroleum | 2,203 | 844 | 38.3% | 2,699 | 1,139 | 42.2% | (496) | (201) | ||
| Schlumberger | 1,679 | 412 | 24.5% | 1,687 | 400 | 23.7% | (8) | (20) | ||
| Hess | 1,653 | 470 | 28.4% | 867 | 328 | 37.8% | 786 | 644 | ||
| Kinder Morgan Inc | 937 | 279 | 29.8% | 401 | 96 | 23.9% | 536 | 353 | ||
| National Oilwell Varco | 724 | 224 | 30.9% | 873 | 269 | 30.8% | (149) | (104) | ||
| Baker Hughes | 400 | 132 | 33.0% | 573 | 193 | 33.7% | (173) | (112) | ||
| Noble Energy | 318 | 86 | 27.0% | 335 | 86 | 25.7% | (17) | (17) | ||
| Helmerich & Payne | 232 | 81 | 34.9% | 205 | 75 | 36.6% | 27 | 21 | ||
| Diamond Offshore | 206 | 30 | 14.6% | 251 | 66 | 26.3% | (45) | (9) | ||
| Nabor Industries | 109 | 11 | 10.1% | 212 | 69 | 32.5% | (103) | (45) | ||
| Halliburton | (183) | (172) | 94.0% | 942 | 304 | 32.3% | (1,125) | (649) | ||
| Total all 14 Big Oil & Gas | 38,386 | 14,481 | 37.7% | 42,894 | 18,397 | 42.9% | (4,508) | (592) | ||
| Total Pretax Income % Decrease | -10.51% | |||||||||
| Total After-tax Combined Net Income % Decrease | -2.42% | |||||||||
| = Positive Income Tax Earnings Spread | 8.09% |
