[Guest post by DRJ]
The two largest offshore drilling companies, one of the largest oilfield service companies, and other major firms have announced plans to relocate their corporate offices to Switzerland:
“Noble Corp. today became the latest in a recent string of Houston oil and gas firms to announce plans to move their corporate headquarters to Switzerland, a change experts said is cheifly for tax purposes. The world’s second largest offshore drilling contractor, now incorporated in the Cayman Islands and run from Sugar Land [Texas], said its board has approved the change, and now will put the proposal to shareholders and the Cayman courts.
The announcement came the same day Transocean, the world’s largest offshore driller, completed the process of changing its incorporation from the Cayman Islands to Switzerland. With the change, CEO Robert Long and other top officers will leave Houston to run the company from a new European headquarters.
Last week, Houston oil field services giant Weatherford International announced plans to reincorporate in Switzerland and move its CEO, Bernard J. Duroc-Danner, and other top officers there. Shareholders have not yet approved the change.
And other companies, including Tyco International and construction firm Foster Wheeler, have also recently announced plans to reincorporate in Switzerland.”
The article notes Nabors Drilling, the world’s largest land driller, is also expected to move. The moves are aimed at protecting the companies from anticipated changes in U.S. tax policies:
“Chiefly, the moves are designed to preserve tax benefits the companies enjoyed from being domiciled in countries like Bermuda and the Cayman Islands with favorable corporate tax rules, said Pierre Conner, an industry analyst with Capital One Southcoast in New Orleans.
“Now, what we’re finding is those companies feel there are better tax protection in Switzerland than in these countries,” he said. “So they’re going ahead and making another step to protect the current tax structures that they have,” Conner said.
Noble, which moved its incorporation from Delaware to the Cayman Islands, currently has an effective tax rate of about 19 percent, said Angie Sedita, industry analyst with Macquarie Capital, in a note to investors today.
Lawmakers have threatened to close tax loopholes that allow U.S. companies to benefit from incorporating in offshore tax havens while operating from the U.S. But Switzerland has tax treaties with the U.S. that would protect companies even if the laws change.”
Companies are also moving to be closer to emerging markets where oil and gas drilling and production are encouraged:
“In addition, the move will put Noble closer to a faster-growing customer base in the eastern hemisphere, where more than half of its revenue comes from today.
Last year, Houston oil field services firm Halliburton Co. cited similar reasons for establishing a dual headquarters in Dubai and moving CEO Dave Lesar there.”
I would encourage these companies to move if I were a shareholder. There’s no future in the U.S. for the oil and gas industry and that means there’s no realistic near-term energy future for America.