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8 Pages

UK Budget 2016: a competitive tax regime for an ultra mature basin

UK Budget 2016: a competitive tax regime for an ultra mature basin

Report summary

The UK upstream oil and gas industry is going through a major cost reduction phase in response to continued low oil prices. However many operators are still in cash-flow negative position. Chancellor George Osborne announced three fiscal measures to support the United Kingdom Continental Shelf (UKCS). A reduction in the rate of Petroleum Revenue Tax (PRT) from 35% to 0%, a reduction in Supplementary Charge Tax (SCT) from 20% to 10% and an extension of the Investment and Cluster Area Allowances to include tariff income. We calculate a transfer of value (NPV10 at 1 Jan 2016) of the UKCS from the government to the companies, by around £3 billion, taking the company value from £26 billion to £29 billion.

What's included?

This report includes 2 file(s)

  • UK Budget 2016: a competitive tax regime for an ultra mature basin PDF - 408.84 KB 8 Pages, 1 Tables, 8 Figures
  • UK Budget 2016.xls XLS - 427.00 KB


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  • Executive summary
    • Background
    • SCT reduction
    • PRT zero rated
    • Investment/Cluster/Onshore allowances
    • Implications
    • Model field analysis
      • Company and project value impact
    • How does Budget 2016 impact exploration?
    • Retained decommissioning liabilities – Budget brings tax relief certainty

In this report there are 9 tables or charts, including:

  • Executive summary
    • Value transfer for the UK
    • Marginal tax rate
    • Government share with varying oil price
    • IRR with varying oil price
    • Government share and IRR at US$60/bbl: varying project cost base
    • International fiscal comparison
    • Project impact
    • Company impact
    • Retained decommissioning liabilities
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