North Sea oil companies get tax boost from Government - Telegraph

More coverage on the North Sea tax boost today via the Telegraph. This news couldn?t have come at a better time for many of the north sea small caps. Many of which are looking to attract partners and finance for 2011/12 drill plans. With hints of more concessions/improvements likely, the North Sea could see II?s and Pi?s returning with speed as share prices continued to trade at a large discount to standard NAV calculations.

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The Telegraph, By Rowena Mason, 7:12PM BST 05 Jul 2011
North Sea oil companies get tax boost from Government

Loss-making North Sea oil and gas companies have been given a boost by the Government scaling back its ?2bn per year tax grab on energy producers.

The Treasury is still working on further possible changes to the North Sea.
The Government imposed a heavier tax rate of 62pc to 80pc on North Sea oil and gas production in the Budget to fund fuel price cuts for motorists. However, on Tuesday Treasury ministers said they would increase tax relief on losses from 6pc to 10pc, costing about ?50m. As a result, Statoil, the Norwegian oil giant, said it would restart work on its Mariner field. However, other energy executives were baffled about why the tax relief would help such a big player.

Centrica switched back on the UK?s biggest gas field, Morecambe Bay, on Friday but said this was ?entirely a coincidence?. It said production restarted because of better market conditions.

Sources close to one major North Sea producer said: ?This tax change doesn?t do anything for us because we?re not making a loss. It?s so niche and marginal, and would only really affect some smaller exploration and production players, as far as we can see.?

Oil and Gas UK, the industry group, said: ?Whilst the change to the allowance will not redress the damage caused by the recent tax increase, it will help new investors to the UKCS who are otherwise disadvantaged compared to more established players.?

The announcement of the tax in March sparked outraged lobbying from oil and gas companies, which argued it risked investment and jobs.

On Tuesday the Treasury was keen for the changes not to be seen as a U-turn, pointing out it had initially been open to fine-tuning the new tax. However, Kerry McCarthy, shadow treasury minister, claimed the Chancellor ?acted rashly and then tried to clear up their mess later?.

The Treasury is still working on further possible changes to the North Sea tax regime, including access to tax relief for decommissioning.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas

Source: http://thesharehub.com/?p=3294

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