Nov 14 Reuters Chevrons deal to buy Hess will unlock 15 billion worth of tax benefits that had once been relegated to the accounting dustbin, as the combined company takes advantage of Hesss past losses to cut future payments, according to the company and tax experts.

The tax shield is a littleknown advantage to Chevron39;s megatakeover of Hess struck last month. The tax benefits are expected to provide the No. 2 U.S. oil and gas producer hundreds of millions of dollars in extra annual cash flow over the next several years.

The tax benefits were definitely factored into how Chevron valued Hess, said Donald Williamson, an accounting professor at American Universitys Kogod School of Business. The Hess losses will allow Chevron to lower its tax rate significantly for several years.

The 1918 Revenue Act first allowed corporations to carry their losses forward as tax benefits to smooth out large fluctuations in income over time. But the losses only come in handy if a company is eventually able to make enough money to have big tax bills.

Before the companies agreed to the 53 billion allstock deal, Hess was sitting on more than 15 billion in net operating losses from previous years and unable to take advantage of them due to low profits and heavy losses, according to explanations Hess has provided in its financial statements.

The independent oil and gas driller had been stung badly by a crash in oil prices in 2016 and had never fully recovered.

Chevron Chief Financial…