Houston, May 11, 2011 --- ConocoPhillips’ [NYSE:COP] Chairman and CEO Jim Mulva will appear May 12 at a Senate Finance Committee hearing in Washington, D.C., where he will outline the negative effects of proposed tax policy targeting major energy companies.
Mulva expects to describe to committee members how misinformation about the industry’s tax liabilities is being used to justify proposed tax increases.
"Our industry already has the highest effective tax rate in the United States," said Mulva. "Increasing these taxes would cost jobs and raise gasoline and other consumer prices, while actually unintentionally reducing the government’s tax revenue by discouraging investment by the industry’s largest and most financially capable companies."
Mulva added that the proposal would impede the industry’s ability to reinvest not only in the oil and natural gas needed to power the economy today, but also in new energy technologies and resources that will be essential in the future.
"Our industry and company are already taxed heavily compared to other industries in the United States," Mulva said. "For example, ConocoPhillips’ effective global income tax rate from 2006 through 2010 was 46 percent. If you look at non-financial companies in the Fortune 500, the 20 largest by market value had an effective tax rate of 27 percent."
That tax rate already limits the company’s ability to invest in finding and recovering energy reserves. In 2010, the company’s payout was equal to its income: After paying $8.3 billion in income taxes – as well as $3.1 billion in other non-income taxes -- ConocoPhillips earned $11.4 billion in income.
Proposals to repeal the Section 199 domestic manufacturing deduction for the five largest oil companies would discriminatorily deny them a tax deduction available to every other manufacturing industry, as well as to large oil companies outside the top five. This tax deduction was enacted by Congress in 2004 to stimulate job growth in the production and manufacturing sector, which in turn, encouraged more domestic energy production.
"The oil and natural gas industry supports 9.1 million jobs in the United States, a fact that is too often overlooked," said Mulva. "Also, taxes are included in gasoline prices. At a time when everyone is concerned over the cost of gasoline, Congress shouldn’t do anything that could actually worsen the situation."
ConocoPhillips is an integrated energy company with interests around the world. Headquartered in Houston, the company had approximately 29,600 employees, $160 billion of assets, and $226 billion of annualized revenues as of March 31, 2011. For more information, go to www.conocophillips.com.
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Nancy Turner (media)
Clayton Reasor (investors)
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. In many cases you can identify forward-looking statements by terminology such as "anticipate," "estimate," "believe," "continue," "could," "intend," "may," "plan," "potential," "predict," "should," "will," "expect," "objective," "projection," "forecast," "goal," "guidance," "outlook," "effort," "target" and other similar words. However, the absence of these words does not mean that the statements are not forward-looking. Where, in any forward-looking statement, the company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that such expectation or belief will result or be achieved. The actual results of operations can and will be affected by a variety of risks and other matters including, but not limited to, crude oil and natural gas prices; refining and marketing margins; potential failure to achieve, and potential delays in achieving expected reserves or production levels from existing and future oil and gas development projects due to operating hazards, drilling risks, and the inherent uncertainties in interpreting engineering data relating to underground accumulations of oil and gas; unsuccessful exploratory drilling activities; lack of exploration success; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; potential failure of new products to achieve acceptance in the market; unexpected cost increases or technical difficulties in constructing or modifying company manufacturing or refining facilities; unexpected difficulties in manufacturing, transporting or refining synthetic crude oil; international monetary conditions and exchange controls; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; general domestic and international economic and political conditions, as well as changes in tax and other laws applicable to our business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission (SEC). Unless legally required, ConocoPhillips undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
ConocoPhillips' effective tax rate of 46 percent reflects an adjustment to income before taxes in 2008 for impairments of $32.9 billion. The company's effective tax rate including these items was 66 percent for the five-year period.