Member Info for Dumbly

Stevo, agreed with most you say but need to add to your reasons what would cause EnQuest to revalue M&A activity to accelerate the value release from the $3+billion of tax losses. I know this is obvious and you know it, and BT was referring to oil price and EPL, but it must not be omitted, especially as of the 3 things; oil price, EPL changes, M&A, it is the only one the company can exert direct control over.

On her Facebook page Saint Harriet was asked whether a reply had been received to the letter dated 5/12/25 she and Andrew Bowie send to Keir Starmer about his apparent misunderstanding of how the EPL works as shown in his interviews on 4/12/25 with STV and BBC. Saint Harriet just replied “ Not yet - but I will be chasing it up now a month has passed.”

If British companies had major investments in another country which placed a spurious tax which expropriated their assets, effectively part nationalising the businesses, then very possibly the gunboats would be sent in. Yet, in the UK the government does this with total impunity.

As the OGPM now defines the government accepted real windfall conditions, as opposed to the false conditions in the ESIM, could there now be grounds for a legal challenge? A least it would highlight the fraudulent expropriation underway.

Yes, ron. One document, the ESIM, with flawed (non inflation-adjusted) windfall threshold price calculations and another, the Consultation document with OPMG, with sensibly calculated windfall threshold prices, and Labour decide to stick with the flawed calculations because… the Conservatives introduced the EPL/ESIM. It’s like they’re saying, we can’t do the right thing for the security and economic growth of the country because of the Tories. Ridiculous reasoning all round and which should be relentlessly exposed.

Saint Harriet in The Commons, I think today, stating the OGPM windfall threshold prices for 2026 in Labour’s NS Consultation document, then asking Shanks the price today of oil and gas. Shanks avoids answering, instead said the EPL will end in 2030 and was introduced by the Conservatives. Just using the ESIM and who introduced the EPL to keep the EPL in place is going to look more and more like the flimsy and, given events, stupid excuses they are.

https://www.facebook.com/share/v/1BqHZdEnom/?mibextid=wwXIfr

What one big thing would you do in order to generate economic growth?

Drill in the NS and scrap Net-Zero targets.

Badenoch on Radio 4’a Today programme this morning:

2:21:38 https://bbc.com/audio/play/m002pdtf

BT, your ramping posts seem to carry bad Juju as there is a definite pattern between your ramping posts and a drop in the SP. Maybe try de-ramping and let’s see if it has the opposite effect 😜

The main reason the actual and predicted EPL tax take is down is due to oil prices.

EPL should have already been scrapped as windfall conditions long since gone.

Labour have put a backstop with the OPMG.

Labour have cover for not removing the EPL earlier because the Conservatives introduced it, plus they were hamstrung due to manifesto commitments.

If EPL has been scrapped at last budget it would certainly have improved general confidence although unlikely new resulting investment would have generated much more EPL before next general election. On top of the technical becoming political, I can understand from a tax-revenue standpoint why Labour did what they did. On licencing, Labour’s thinking is probably to see the politics and public opinion at the time leading up to next GE.

A highly credible industry commentator in contact with industry insiders recently told me “several people I talked to about the OPMG said the design was sensible, and that while they would like to see it earlier, they were not too pessimistic about 2030 since it would take some time to start up new projects and capex could be run up in the interim and then offset later”.

But… what drives through a stake through this logic is the further changed geopolitical situation after 3rd January. National Security has gone to the top of the priority list. Removing the EPL now could accelerate investment, bring forward everything by 3 years or more (although, at current oil price predictions even this may not be enough to attract big capital). For National Security reasons stimulating production from the UKCS should be considered the imperative. It would also support Labour’s stated number one priority of growing the economy. Not that it should be needed, but citing National Security would be perfect cover for Starmer to remove now the EPL and modify the licencing policy.

Based on the new reality, National Security must now be the overarching reason relentlessly cited for the earlier removal of the EPL. This imperative of National Security need goes above the interests of companies, investors, regions, individuals, environmental activists, net-zero targets, as it goes to the heart of a government’s role - the safety of the nation. It would be difficult for anyone credible to argue against this.

Many got caught up in and exploited the fashionable craze. The Conservatives did by passing NZ targets into law. Labour boxed themselves in with their manifesto and by giving free rein to the climate zealots. There may be an oil glut now but let’s see in 5 years. And let’s also see how geopolitics develop. The best assumption is a return to spheres of influence with many countries in one way or another coalescing around the West and the East. The UK government’s priority now should be defense. Thinking how things could develop and being ready not for a worst case scenario but for the likely scenario. Across the board strengthening of the military is needed, including ensuring sufficient oil and the required refining capability and its refined products are available. Trump is not pushing to drill in the NS mainly for the interests of American companies but so the block of allies which will inevitably gather closer around the US have the resources needed to militarily counter the other block. It is imperative the UK’s hydrocarbon resources are extracted to the maximum. Not to do this would be a dereliction of foresight and duty. It there is a shortage of fuel or other oil derivatives, there will be no point in a future PM waving May’s NZ law or Starmer’s manifesto in the air as justification. When situations change leaders anticipate likely outcomes and change accordingly. Is Starmer a leader or an administrator?

Watch to the end…https://x.com/harrietcross_mp/status/2006429446341829085?s=46&t=uz3in5yMdDdYvqnOjeh9vg

Yes, racks, they have long stated they plan to exit the NS, Apache the same. Harbour wants to reduce NS assets, Dana and others want to trim. More deals, especially to soak up and share tax loss assets, will land soon.

However, many of Petrofac’s UK customers will be affected by the EPL, although in 2023 Petrofac reported only 32% of its revenue came from the United Kingdom.

2phves, the OGPM is a revenue-based tax of 35% and would kick in when the post/hedging realised revenue for either oil or gas is above its threshold. Each commodity is treated separately. If the realised revenue for only one commodity is above its threshold it has no impact for OGPM taxation on the other commodity. CT/ST would continue as now.

That’s what I understand, Kamrat, 40% on the profit and 35% on the realised revenue above the thresholds.

You have a good weekend too.

To add, even if never implemented the OGPM is still helpful as it acts as a fiscal policy backstop should Labour somehow manage to still be in power in 2030 and beyond. Not a guaranteed backstop as they could always find a reason to change things yet again.

Stevo, I don’t see the difference between what I said and you say. Yes, the OGPM is a tax on “surplus revenue” above the thresholds. CT/ST would be calculated as now. Hedging will be considered but exactly how is to be decided. Why do you calculate the OGPM at 40% when the explanatory document says “The OGPM tax rate will be 35%”? I too doubt the OGPM will ever be implemented. I expect The Treasury for now has working out all the details in the “we’ll work it out when we get there” folder.

I have not paid much attention to the detail of the OPMG as it’s over 4 years away, industry people (including AB) have stated it is acceptable, and should a different government win the next GE because it may never actually start. This said, I’ve now looked at https://assets.publishing.service.gov.uk/media/6925a28722424e25e6bc315d/Oil_and_Gas_Price_Mechanism_Summary_of_Responses.pdf They key points I see are:

“The OGPM will be a revenue-based tax…”

“The government will set two thresholds: one for oil and one for gas, and they will apply per financial year.”

“In setting thresholds, the government will adopt two price points, one for oil (in dollars per barrel) and one for gas (in pence per them), with Natural Gas Liquids treated as oil for simplicity.”

“…the amount that will be chargeable to the OGPM will be the part of the consideration that exceeds the threshold.”

“While the ambition is to implement a transaction-based OGPM to effectively target windfalls, the government acknowledges practical challenges in tracking hedging outcomes and will work with industry to identify a level of transaction data that balances administrative feasibility with policy integrity.”

Based on the above, my understanding is as in the following example. Assume 2,000 revenue of which from oil 50 is above the oil threshold and from gas 50 is also above the gas threshold. So, 1,900 revenue below OPMG thresholds and 100 above. Assume an overall gross profit of 200. The 200 gross profits would be taxed at 40%, so 80. The 100 of oil and gas revenue above the thresholds would be taxed an extra 35%, so 35. Total tax 80+35 = 115. Is this understanding correct?

Agreed, Kraken, all jobs associated with the industry should be considered, just the ancillary jobs are harder to isolate and identify, so would probably be based more on anecdotal evidence, whereas jobs lost directly in the industry should be fairly easy to identify.

Reeves claims over the last decade 500 or so jobs a month were lost and she does not believe the current monthly jobs loss is 1,000 or so. Of course job losses is real and policy, the EPL, the main cause, but OEUK and the AGCofC need to substantiate their 1,000 claim, otherwise how/why did they make it?

https://www.pressandjournal.co.uk/fp/politics/6918307/north-sea-jobs-chancellor-grangemouth/#comments

When OEUK says 1000 jobs a month are being lost, do they mean directly in the oil and gas sector, or includes the wider ancillary and support services including hospitality, taxis etc etc? If, as it seems, it refers to jobs lost directly in the sector, then it should not be difficult to ask all the OEUK members to report each month the net difference in employees. OEUK now needs to step up to the challenge and find a wayto demonstrate with facts what they are claiming.

Chancellor Rachel Reeves has said she does not believe 1,000 jobs are being lost in the North Sea every month as a result of UK Government policy.

https://www.msn.com/en-gb/news/uknews/chancellor-says-she-does-not-believe-1-000-jobs-being-axed-a-month-in-north-sea/ar-AA1SwJc9?ocid=msedgntp&pc=HCTS&cvid=6942c20923c949b4a75c38f5fce71d8e&ei=10