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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Provision (Benefit) for Income Taxes from Continuing Operations

The provision (benefit) for income taxes from continuing operations consisted of:

	2014			2013			2012
	(In millions)
United States
Federal
Current	$	(1	)	$	8		$	30
Deferred		156			103			(435	)
State		57			9			31
		212			120			(374	)
Foreign
Current		453			941			2,012
Deferred		79			186			(224	)
		532			1,127			1,788
Total		744			1,247			1,414
Adjustment of deferred taxes for foreign income tax law changes*		—			(682	)		115
Total provision for income taxes	$	744		$	565		$	1,529

The reported amount for 2013 reflects $674 million for the effect of the Denmark hydrocarbon income tax law change to the Chapter 3A regime from the Chapter 3 regime in December 2013 and $8 million for the effect of a change in Norway’s hydrocarbon and base corporate income tax rates in December 2013. In 2012, the reported amount reflects the effect of the UK supplementary income tax rate change in July 2012.

Income From Continuing Operations Before Income Taxes

Income from continuing operations before income taxes consisted of the following:

	2014		2013		2012
	(In millions)
United States (a)	$	676	$	580	$	(608	)
Foreign		1,760		4,021		3,945
Total income from continuing operations before income taxes	$	2,436	$	4,601	$	3,337

(a)	Includes substantially all of the Corporation’s interest expense, corporate expense and the results of commodity hedging activities.

Components of Deferred Tax Liabilities and Deferred Tax Assets

The components of deferred tax liabilities and deferred tax assets at December 31 were as follows:

	2014			2013
	(In millions)
Deferred tax liabilities
Property, plant and equipment and investments	$	(5,361	)	$	(5,581	)
Other		(269	)		(155	)
Total deferred tax liabilities		(5,630	)		(5,736	)
Deferred tax assets
Net operating loss carryforwards		3,010			2,726
Tax credit carryforwards		193			161
Property, plant and equipment and investments		2,245			2,643
Accrued compensation, deferred credits and other liabilities		449			982
Asset retirement obligations		1,421			1,516
Other		261			216
Total deferred tax assets		7,579			8,244
Valuation allowances		(1,416	)		(1,519	)
Total deferred tax assets, net of valuation allowances		6,163			6,725
Net deferred tax assets	$	533		$	989

Deferred Tax Assets and Liabilities, Net

In the Consolidated Balance Sheet, deferred tax assets and liabilities are netted by taxing jurisdiction and are recorded at December 31 as follows:

	2014			2013
	(In millions)
Other current assets	$	373		$	963
Deferred income taxes (long-term asset)		2,169			2,319
Accrued liabilities		—			(1	)
Deferred income taxes (long-term liability)		(2,009	)		(2,292	)
Net deferred tax assets	$	533		$	989

Difference Between Corporation's Effective Income Tax Rate from Continuing Operations and U.S. Statutory Rate

The difference between the Corporation’s effective income tax rate from continuing operations and the U.S. statutory rate is reconciled below:

	2014			2013			2012
U.S. statutory rate		35.0	%		35.0	%		35.0	%
Effect of foreign operations*		1.0			6.9			12.5
State income taxes, net of Federal income tax		1.5			0.1			0.6
Change in enacted tax laws		—			(14.8	)		3.4
Gains on asset sales, net		(8.3	)		(15.6	)		(5.4	)
Other		1.3			0.7			(0.3	)
Total		30.5	%		12.3	%		45.8	%

*	The variance in effective income tax rates attributable to the effect of foreign operations primarily resulted from the suspension of operations in Libya for a portion of 2013 and most of 2014.

Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

Below is a reconciliation of the gross beginning and ending amounts of unrecognized tax benefits:

	2014			2013
	(In millions)
Balance at January 1	$	570		$	523
Additions based on tax positions taken in the current year		42			161
Additions based on tax positions of prior years		70			2
Reductions based on tax positions of prior years		(76	)		(96	)
Reductions due to settlements with taxing authorities		(3	)		(19	)
Reductions due to lapses in statutes of limitation		—			(1	)
Balance at December 31	$	603		$	570

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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