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Occidental Petroleum Corporation Message Board

  • whrutter whrutter Feb 14, 2014 12:14 PM Flag

    California Taxes

    Haven't heard how much the new non-California company will save in taxes, but I bet it's a boatload. Obviously, it is the main reason for the separation, though no one will talk about it openly.

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    • Have read taxes are only some of the problems. Gov is no help and geology of areas are pretty tough to drill. Do exist shareholders get a piece of this spin-off and if so what might be the distribution compared to my holdings of BBEP, MEMP?

      • 1 Reply to bidwillie2
      • In a spin off, the entire new company is given to the existing holders. Example, when COP spun off PSX, the existing COP shareholders received one share of PSX for each two shares of COP. Then each company declared their own dividend the 1st quarter after the distribution.

        In the case of OXY, they would need to decide how many shares the new company should consist of and then prorate those shares to existing OXY shareholders. In this case based upon Chazen's comments it sounds like the new company will be more of a growth story and use all of their cash flow to drill for more oil. The examples that you used, BBEP & MEMP are MLP's and must distribute most of their earnings as distributions to the units. Based on what has been described, the California company will not be an MLP.

 
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