UK Oil Firms to Brief Lawmakers Next Month on Tax Hike Impact
Monday, April 04, 2011
Dow Jones Newswires
by Alexis Flynn
U.K. lawmakers will hear submissions next month from the country's major oil and gas producers as to how a large tax increase is affecting the industry, the Energy and Climate Change Committee said Monday.
In a one-off evidence session scheduled for May 4, members of the parliamentary committee will hear oral submissions from Oil & Gas UK and the Oil and Gas Independents' Association.
The meeting comes as several large companies said they were reconsidering billions of pounds of investments in oil and gas production after a shock tax increase in Chancellor of the Exchequer George Osborne's budget two weeks ago.
In a statement confirming it will participate in the session, Oil & Gas UK said it was consulting its members to quantify the full impact of the budget move on investment and will publish the findings by the end of April.
Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts
Monday, April 4, 2011
Tuesday, March 29, 2011
DNS Outlines Strategy to Aid UK Companies in Decommissioning Work
DNS Outlines Strategy to Aid UK Companies in Decommissioning Work
Tuesday, March 29, 2011
Rigzone Staff
by Karen Boman
Decom North Sea (DNS), an industry body established in 2010 to assist UK companies in obtaining work opportunities in future North Sea decommissioning activity, now has more than 120 members, and is stepping up effort to help companies pursue decommissioning work opportunities.
DNS Chief Executive Brian Nixon said, "With around £1billion of decommissioning expenditure forecast annually for the UK North Sea by 2015 and only 7% of projects completed to date, there is a clear need for us to support our supply chain to secure maximum business potential.
"Compelling support was recorded for Decom North Sea to look at increasing current activities, namely networking events which provide value to our members; regional and topical focus groups; industry communication and knowledge sharing; mapping the supply chain strengths and capabilities; further development of appropriate contracting models: and facilitating introductions across the industry."
In addition, a range of more strategic initiatives and opportunities have been identified and prioritized including the following:-
In line with the priorities identified, DNS has organized a program of events, seminars and share fairs in collaboration with regional energy development organizations and government agencies, with activity covering the north-east, Highlands and Central Belt in Scotland, and the north-east and south-east in England where most of the potential supply chain for the decommissioning market is based.
DNS Board Chairman Murdo MacIver said, "One of the principle reasons for setting up Decom North Sea was to provide a mechanism for sharing non commercial information and to establish a platform that would allow companies from across the industry to obtain consistent and clear information. The recent strategy consultation, which involved all the new directors recently voted onto the board, has fully supported this and it is great to see some real drive and enthusiasm from the board in delivering these strategic objectives."
Tuesday, March 29, 2011
Rigzone Staff
by Karen Boman
Decom North Sea (DNS), an industry body established in 2010 to assist UK companies in obtaining work opportunities in future North Sea decommissioning activity, now has more than 120 members, and is stepping up effort to help companies pursue decommissioning work opportunities.
DNS Chief Executive Brian Nixon said, "With around £1billion of decommissioning expenditure forecast annually for the UK North Sea by 2015 and only 7% of projects completed to date, there is a clear need for us to support our supply chain to secure maximum business potential.
"Compelling support was recorded for Decom North Sea to look at increasing current activities, namely networking events which provide value to our members; regional and topical focus groups; industry communication and knowledge sharing; mapping the supply chain strengths and capabilities; further development of appropriate contracting models: and facilitating introductions across the industry."
In addition, a range of more strategic initiatives and opportunities have been identified and prioritized including the following:-
- provision of detailed and reliable market intelligence drawn from existing industry sources and filtered to be easily accessible by DNS members – (an industry led workgroup has now been established to lead this initiative)
- facilitate groups of members to share information, form alliances, address technologies etc.
- research decommissioning in other sectors including nuclear and salvage, to study how they deal with timing uncertainty, identify areas for transfer of experience, cross business opportunities etc. – (a first workshop on nuclear synergies has been held, with a separate group reviewing the salvage industry)
- be active with governments, regulators and operators on behalf of DNS membership
- understand capabilities and gaps relating to people, processes and technologies, and then put in place mechanisms to address the issues and opportunities – (a skills steering group is now in place)
- promote existing capability, new capacity, case studies etc.
- engage with the financial investment community to understand their drivers – promote awareness of members capabilities and needs, facilitate introductions
- look overseas to identify market opportunities and to promote member capabilities.
In line with the priorities identified, DNS has organized a program of events, seminars and share fairs in collaboration with regional energy development organizations and government agencies, with activity covering the north-east, Highlands and Central Belt in Scotland, and the north-east and south-east in England where most of the potential supply chain for the decommissioning market is based.
DNS Board Chairman Murdo MacIver said, "One of the principle reasons for setting up Decom North Sea was to provide a mechanism for sharing non commercial information and to establish a platform that would allow companies from across the industry to obtain consistent and clear information. The recent strategy consultation, which involved all the new directors recently voted onto the board, has fully supported this and it is great to see some real drive and enthusiasm from the board in delivering these strategic objectives."
Monday, March 28, 2011
EnCore Sidetrack Delivers Additional Pay
EnCore Sidetrack Delivers Additional Pay
Monday, March 28, 2011
EnCore Oil plc
Monday, March 28, 2011
EnCore Oil plc
by SubseaIQ
EnCore announced that the Burgman side-track well 28/9-4z located on UKCS Central North Sea Block 28/9 has successfully encountered hydrocarbons in the targeted Lower Tay sandstone interval.
The well was drilled directionally with a hole angle up to 64 degrees to a Total Depth of 5,237 feet Measured Depth (M.D.). Initial analysis indicates net oil pay of 135 feet over a gross reservoir interval of 135 feet (M.D.), equivalent to 64 feet of net vertical oil pay over gross vertical interval of 64 feet True Vertical Thickness. Preliminary log analysis indicates an average porosity of 38%, significantly better than in the original Burgman well. Initial estimates suggest a likely STOOIP in the range of 80 - 120 mmbbls.
This result now concludes the current drilling program on Block 28/9 and following completion of this well, the Transocean GSF Galaxy II heavy duty jack-up rig will be demobilized. The Galaxy II has drilled three successful wells during this drilling campaign, resulting in two substantial discoveries at Varadero and Burgman, and an appraisal of Catcher North.
Commenting on the result, Alan Booth, EnCore's Chief Executive Officer, said, "This is an excellent result and supports the partnership's geophysical model for the identification of Tay sands over the Burgman structure. The sand thickness and quality was very much at the upper end of our pre side-track expectations. The confirmation of another important discovery in the license is a fitting end to this phase of drilling. On behalf of EnCore I would like to thank our co-venturers for their help and support and look forward to continuing to work with them as we progress further appraisal and development work on the Block. We would also like to thank ADTI, Transocean and all the offshore crew and service providers that helped deliver a safe and successful drilling program. EnCore is now looking forward to the results of drilling at Cladhan, which we hope will be within the next 10 days or so.
"I would like to take this opportunity to make some general comments, not specific to our discoveries in the Catcher area, on the recent fiscal changes announced in the budget. The EnCore team have been directly involved in the discovery of a number of the UK's most important recent oil and gas fields, one of which now accounts for more than 10% of current UK oil production, and so we recognize the need to encourage the discovery and ultimately the production of the UK's indigenous resources.
"Whilst unexpected tax changes are never welcome, given the current state of the nation's finances, one can at least rationalize the desire to raise revenues from fields that have already paid back their risked investments during a time of very high oil prices. However, failure to encourage the discovery of new fields as well as the development of newer, smaller and difficult fields on fair and predictable fiscal terms is in no one's interest. Undeveloped and undiscovered oil and gas pays no taxes, creates and sustains no employment and a slowdown in UKCS activity will simply increase the UK's reliance on imported oil and gas from less politically stable, if not as fiscally unpredictable, parts of the globe. I welcome the Government's indication that it is prepared to discuss with the industry the enhancement and broadening of the recently introduced Field Allowances which I believe, if properly structured, could mitigate the effects of these changes and continue to incentivise those companies who wish to continue to invest in finding and developing the UK's offshore natural resources."
The equity in the Block 28/9 joint venture partnership is as follows: EnCore Oil plc (15 percent., Operator), Premier Oil (35 percent.), Wintershall (UK North Sea) Limited (20 percent.), Nautical Petroleum (15 percent.) and Agora Oil & Gas (15 percent.).
The well was drilled directionally with a hole angle up to 64 degrees to a Total Depth of 5,237 feet Measured Depth (M.D.). Initial analysis indicates net oil pay of 135 feet over a gross reservoir interval of 135 feet (M.D.), equivalent to 64 feet of net vertical oil pay over gross vertical interval of 64 feet True Vertical Thickness. Preliminary log analysis indicates an average porosity of 38%, significantly better than in the original Burgman well. Initial estimates suggest a likely STOOIP in the range of 80 - 120 mmbbls.
This result now concludes the current drilling program on Block 28/9 and following completion of this well, the Transocean GSF Galaxy II heavy duty jack-up rig will be demobilized. The Galaxy II has drilled three successful wells during this drilling campaign, resulting in two substantial discoveries at Varadero and Burgman, and an appraisal of Catcher North.
Commenting on the result, Alan Booth, EnCore's Chief Executive Officer, said, "This is an excellent result and supports the partnership's geophysical model for the identification of Tay sands over the Burgman structure. The sand thickness and quality was very much at the upper end of our pre side-track expectations. The confirmation of another important discovery in the license is a fitting end to this phase of drilling. On behalf of EnCore I would like to thank our co-venturers for their help and support and look forward to continuing to work with them as we progress further appraisal and development work on the Block. We would also like to thank ADTI, Transocean and all the offshore crew and service providers that helped deliver a safe and successful drilling program. EnCore is now looking forward to the results of drilling at Cladhan, which we hope will be within the next 10 days or so.
"I would like to take this opportunity to make some general comments, not specific to our discoveries in the Catcher area, on the recent fiscal changes announced in the budget. The EnCore team have been directly involved in the discovery of a number of the UK's most important recent oil and gas fields, one of which now accounts for more than 10% of current UK oil production, and so we recognize the need to encourage the discovery and ultimately the production of the UK's indigenous resources.
"Whilst unexpected tax changes are never welcome, given the current state of the nation's finances, one can at least rationalize the desire to raise revenues from fields that have already paid back their risked investments during a time of very high oil prices. However, failure to encourage the discovery of new fields as well as the development of newer, smaller and difficult fields on fair and predictable fiscal terms is in no one's interest. Undeveloped and undiscovered oil and gas pays no taxes, creates and sustains no employment and a slowdown in UKCS activity will simply increase the UK's reliance on imported oil and gas from less politically stable, if not as fiscally unpredictable, parts of the globe. I welcome the Government's indication that it is prepared to discuss with the industry the enhancement and broadening of the recently introduced Field Allowances which I believe, if properly structured, could mitigate the effects of these changes and continue to incentivise those companies who wish to continue to invest in finding and developing the UK's offshore natural resources."
The equity in the Block 28/9 joint venture partnership is as follows: EnCore Oil plc (15 percent., Operator), Premier Oil (35 percent.), Wintershall (UK North Sea) Limited (20 percent.), Nautical Petroleum (15 percent.) and Agora Oil & Gas (15 percent.).
Friday, March 25, 2011
Ithaca Briefs Impact of UK's Fiscal Changes
Ithaca Briefs Impact of UK's Fiscal Changes
Friday, March 25, 2011
Ithaca Energy Inc.
Ithaca clarifies the impact on the Company's near to medium term financial position further to the recent announcement made by the UK government regarding changes to fiscal regulations.
On March 23, 2011, the UK government announced that it would be increasing the rate of supplementary charge from 20% to 32% from 24 March 2011, resulting in a 62% marginal tax rate. The following important factors should be taken into account when considering the specific impact of the tax increase on the Company:
Friday, March 25, 2011
Ithaca Energy Inc.
Ithaca clarifies the impact on the Company's near to medium term financial position further to the recent announcement made by the UK government regarding changes to fiscal regulations.
On March 23, 2011, the UK government announced that it would be increasing the rate of supplementary charge from 20% to 32% from 24 March 2011, resulting in a 62% marginal tax rate. The following important factors should be taken into account when considering the specific impact of the tax increase on the Company:
- The Company's tax losses pool at the start of 2011 was approximately US $215 million. This pool, combined with the Company's predicted future capital expenditure program, indicates no taxes are likely to be payable for at least the next five years.
- The Company's revenues from future field developments with approximately less than 25 million barrels of oil equivalent, such as the Athena field, will continue to benefit from the Small Field Allowance sheltering up to US $120 million of field profits from the 32% supplementary charge.
- The Company has limited decommissioning liabilities, which minimizes its exposure to the announced differential tax treatment of decommissioning costs.
Thursday, March 24, 2011
Premier Oil Sees Tax Allowance Offsetting UK North Sea Tax Hike
Premier Oil Sees Tax Allowance Offsetting UK North Sea Tax Hike
Thursday, March 24, 2011
by Alexis Flynn
U.K. government plans to raise taxation on North Sea oil and gas production are unlikely to have a significant impact on Premier's earnings for at least the next four years, as its effects will be mitigated by $1.1 billion in tax allowances from a 2009 acquisition, Premier Oil Chief Executive Simon Lockett said Thursday.
"We're not immune, but we are mitigated from the effects of this kind of situation," said Lockett.
The Chancellor of the Exchequer of the U.K. Wednesday announced plans to raise the supplementary charge levied on profits from oil and gas produced in the U.K. to 32% from the previous 20% level. Premier said it is insulated against the effects of the levee because of a tax allowance the company received when it bought explorer Oilexco's North Sea operations in 2009,
Shares in several small-and mid-cap producers with significant assets in the North Sea were sharply lower in the wake of yesterday's news. U.K. continental shelf-focused EnQuest's stock fell 12% Wednesday, while peer Nautical lost 9%. Although Premier Oil shares fell 4.6% on the news, they have since recovered much of the lost ground. At 1248 GMT, Premier Oil shares were up 0.6 pence, or 3.2%, at 1973p amid a broadly higher London market and after reporting earnings Thursday that beat forecasts.
Premier Oil's 2009 deal to buy Oilexco's North Sea assets included it assuming $1 billion of losses that can be written off against the tax, of which it can use about 25% -- around $250 million -- a year.
Deutsche Bank said in a note that these allowances could shelter Premier from the U.K. cash tax until at least 2014, adding that it sees "these tax increases as presenting Premier with growth opportunities, not just value risk." It recommends the stock as 'buy' with a 2275 pence price target.
The oil and gas producer, which also has significant interests in Vietnam and the Middle East, Thursday reported record net profits of $130 million, 15% higher than consensus analyst estimates. The company also said it was on track to reach production of 75,000 barrels of oil equivalent per day and expects to spend $500 million a day on acquisitions this year.
Lockett said a positive consequence of yesterday's budget announcement was that it could provide buying opportunities as peers come under further cost pressure as a result of the tax rise.
"If I can take one minor positive out of it, it means that if we were looking for acquisitions in the North Sea then they are now slightly cheaper than yesterday," said Lockett.
Link
Thursday, March 24, 2011
by Alexis Flynn
U.K. government plans to raise taxation on North Sea oil and gas production are unlikely to have a significant impact on Premier's earnings for at least the next four years, as its effects will be mitigated by $1.1 billion in tax allowances from a 2009 acquisition, Premier Oil Chief Executive Simon Lockett said Thursday.
"We're not immune, but we are mitigated from the effects of this kind of situation," said Lockett.
The Chancellor of the Exchequer of the U.K. Wednesday announced plans to raise the supplementary charge levied on profits from oil and gas produced in the U.K. to 32% from the previous 20% level. Premier said it is insulated against the effects of the levee because of a tax allowance the company received when it bought explorer Oilexco's North Sea operations in 2009,
Shares in several small-and mid-cap producers with significant assets in the North Sea were sharply lower in the wake of yesterday's news. U.K. continental shelf-focused EnQuest's stock fell 12% Wednesday, while peer Nautical lost 9%. Although Premier Oil shares fell 4.6% on the news, they have since recovered much of the lost ground. At 1248 GMT, Premier Oil shares were up 0.6 pence, or 3.2%, at 1973p amid a broadly higher London market and after reporting earnings Thursday that beat forecasts.
Premier Oil's 2009 deal to buy Oilexco's North Sea assets included it assuming $1 billion of losses that can be written off against the tax, of which it can use about 25% -- around $250 million -- a year.
Deutsche Bank said in a note that these allowances could shelter Premier from the U.K. cash tax until at least 2014, adding that it sees "these tax increases as presenting Premier with growth opportunities, not just value risk." It recommends the stock as 'buy' with a 2275 pence price target.
The oil and gas producer, which also has significant interests in Vietnam and the Middle East, Thursday reported record net profits of $130 million, 15% higher than consensus analyst estimates. The company also said it was on track to reach production of 75,000 barrels of oil equivalent per day and expects to spend $500 million a day on acquisitions this year.
Lockett said a positive consequence of yesterday's budget announcement was that it could provide buying opportunities as peers come under further cost pressure as a result of the tax rise.
"If I can take one minor positive out of it, it means that if we were looking for acquisitions in the North Sea then they are now slightly cheaper than yesterday," said Lockett.
Link
Tuesday, March 22, 2011
UK Govt: Deepwater Oil Drilling Safety Rules Fit for Purpose
Tuesday, March 22, 2011
Dow Jones Newswires
by James Herron
The U.K. government gave its regulatory regime for deep water offshore oil and gas drilling a largely clean bill of health, saying that existing rules address most of the concerns raised by a parliamentary committee studying the impact of the Deepwater Horizon disaster in the Gulf of Mexico.
U.K. lawmakers on the Energy and Climate Change Committee had raised serious doubts in January about whether the oil industry is prepared to tackle a deep water blowout and oil spill should it occur in the North Sea, but the government's response to these concerns published Tuesday said existing rules are adequate.
"The U.K. government has already taken a number of actions (such as increasing the number of environmental inspectors and inspections to mobile rigs) to further bolster the already robust U.K. regulatory regime," the government report said.
One of the Committee's principal concerns--that the oil industry couldn't handle an oil spill in the rough seas west of the Shetland Islands--has already been dealt with, the government said. Chevron has developed a cap that can be used to seal a blowout in this area that will be available for anybody to use, the government said. Additional capping devices are also in development, it said.
The government did promise to assess in partnership with the oil industry whether oil rigs' blowout preventers--the crucial piece of equipment that failed aboard the Deepwater Horizon--should be upgraded to include extra failsafes, called blind shear rams. This assessment won't be concluded before summer, it said.
"We will also be considering the requirement of [compulsory] insurance as part of our review," it said.
Existing rules cover the other main concerns of the U.K. lawmakers--that companies spill response plans aren't adequate for the least likely but highest risk accidents; that existing financial provisions wouldn't cover the cost of a large spill; and that workers aboard offshore rigs fear reprisals if they raise safety concerns--the government said.
Link
U.K. lawmakers on the Energy and Climate Change Committee had raised serious doubts in January about whether the oil industry is prepared to tackle a deep water blowout and oil spill should it occur in the North Sea, but the government's response to these concerns published Tuesday said existing rules are adequate.
"The U.K. government has already taken a number of actions (such as increasing the number of environmental inspectors and inspections to mobile rigs) to further bolster the already robust U.K. regulatory regime," the government report said.
One of the Committee's principal concerns--that the oil industry couldn't handle an oil spill in the rough seas west of the Shetland Islands--has already been dealt with, the government said. Chevron has developed a cap that can be used to seal a blowout in this area that will be available for anybody to use, the government said. Additional capping devices are also in development, it said.
The government did promise to assess in partnership with the oil industry whether oil rigs' blowout preventers--the crucial piece of equipment that failed aboard the Deepwater Horizon--should be upgraded to include extra failsafes, called blind shear rams. This assessment won't be concluded before summer, it said.
"We will also be considering the requirement of [compulsory] insurance as part of our review," it said.
Existing rules cover the other main concerns of the U.K. lawmakers--that companies spill response plans aren't adequate for the least likely but highest risk accidents; that existing financial provisions wouldn't cover the cost of a large spill; and that workers aboard offshore rigs fear reprisals if they raise safety concerns--the government said.
Link
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