Up down in near future? Oil rig count in 23 years record high of over 2,600, versus a record low of 800 in 2007.
Discuss, 5 years readers of the forum, been here since level 1
i’m long offshore oil drillers…up overtime though not the best business to be in…valuations reasonable…
http://www.tpweek.com/Article.aspx?ArticleID=2991947&LS=EMS624631
In its annual regulatory filing, Transocean reported that the IRS is proposing transfer pricing adjustments totalling $473 million for assessments from 2008 and 2009 relating to transfer pricing for rig charters.
please elaborate…i’m not exactly following…how does transfer pricing in this case affect transocean?
Well if they lose the case they are gonna have to pony up with several hundred mil to teh IRS, thus reduce their bottom line.
But maybe that wouldnt affect their valuation too much, not sure how much it makes up of their future earnings.
i dont’ understand transfer pricing in this case…i thought transfer pricing was an internal measure used to determine the allocation of resources…
a few hundred million one off charge would be considered a 1 time item and ignored…no impact if that is the case…
You are correct frank.
However, their internal pricing has potentially been wrong, and in this case it appears resulted in profits being shifted from a higher tax to a lower tax jurisdiction.
One off, yes I guess this is true, but If they lose the case it may have an impact going forward ojn their bottom line as they will have to adjust pricing in future to reflect this.
I dont know what transaction the case is about though, so who knows. But just thought id point it out since there was a post about RIG and I saw the article.
ok, that makes perfect sense now…
I havent seen the RIG case either, but I would suspect anything that goes back and adjust the Transfer Price would have impacts moving forward. Unless, they have already adjusted the transfer prices to get them in the acceptable range of profit for the government. Again, havent seen this case, but in general if a government has a problem with your transfer prices and/or local profitability level driven from that, I would expect that they are ok with it in some years and not in others without changes (unless the comparisons profit ranges changed, etc).