European-based oil majors BP plc and Royal Dutch Shell plc each expect future after-tax earnings in the United States to be impacted positively by recently enacted federal tax reform legislation, but fourth quarter results may see impairments of $1.5-2.5 billion, the operators said.

President Trump late last month signed into law HR1, also known as The Tax Cuts and Jobs Act, a $1.5 trillion reform bill. Effective New Year’s Day, corporate income tax rates were cut from 35% to 21%.

BP, which NGI has ranked as North America’s largest natural gas marketer for several years, said future domestic after-tax profits should reap the reform benefits mostly because of the reduction in the corporate tax rate. BP’s U.S. businesses stretch from the deepwater Gulf of Mexico across the onshore and include refinery/marketing operations too.

However, the ultimate impact of the changes in BP’s corporate rate is subject to several complex provisions, which the oil major said it is reviewing.

“The lowering of the U.S. corporate income tax rate to 21% requires revaluation of BP’s U.S. deferred tax assets and liabilities,” BP management said. “The current estimated impact of this will be a one-off noncash charge to the Group income statement of around $1.5 billion that will impact BP’s fourth quarter 2017 results.”

Details of the final actual charges should be available when BP issues its 4Q2017 results on Feb. 6.

Shell expects the potential economic impact of the tax reform legislation to be “favorable” to its U.S. operations, also because of the cut to the corporate income tax rate.

What impact the reform may have on fourth quarter results is being determined, management said.

“However, on the basis of the third quarter 2017 financial statements, Shell would have incurred an estimated charge to earnings of $2.0-2.5 billion primarily driven by a remeasurement of its deferred tax position to reflect the lower corporate income tax rate. This charge represents a noncash adjustment and will be reflected as an identified item.”