Member Info for Dumbly

One of the reasons the EPL was structured as a levy is so they could avoid previous tax losses being used against it. Because they wanted the cash. All, including Starmer, now openly refer to the EPL has a windfall tax. It’s fanciful, but could this give rise to the possibility of a challenge to get going forward tax losses usable against the EPL? If Labour wanted to help the Independents, they could allow tax losses to be used against the EPL. This would reduce the tax take now, but the trade-off would be to help the independents (and less so the Majors) as it is the Independents who are the future of the North Sea.

Thanks, Stevo. Strange still no OU.

So, the amount on B/S is a Deferred Tax Asset, being the probable tax saving due to probable profits? But, as it is not discounted the NPV to the company would be lower. Presumably, all other things being equal as at 30th June 25, if the company acquired new profitable production, the B/S would be strengthened as the recognised DTA amount would increase.

Thanks, Stevo, for the confirmation and the comment. If recognising on the B/S is the same as the best estimate of Net Present Value (is it)), then considering current market, asset/production and physical conditions, the amount shown at 30 June 2025 looks optimistic and must’ve taken some negotiation for the auditors to accept it.

“… at the end of last year, before their merger, Neo Energy and Repsol together had almost $1bn tax credits, according to Stifel analysis.”

https://www.ft.com/content/56102491-0987-4517-b09b-5fe56ce7f524

Aim, my understanding is that “tax assets” is the generic term, whilst “tax credits” means the tax which could saved by consuming the available “tax losses”. At a 40% tax rate, $1b of tax credits is equal to $2.5b of tax losses. EnQuest has $3.2b or so of tax losses, which at 40% tax saving equals $1.28b of tax credits. The actual present value of tax credits depends on the prediction of when they can be consumed. Happy to hear other views if my understanding is considered incorrect.

Swinney to Starmer about the EPL (that Starmer thinks has been replaced already by the OGPM).

“The First Minister suggested Sir Keir could be remembered as a modern-day Margaret Thatcher if he fails to change course on Scotland.

Mr Swinney said: "The oil and gas industry has been an important part of Scotland's story, an important part of who we are.

"That is why when I met the Prime Minister on Friday, I made clear the existential nature of the current threat that we face.

"I left the Prime Minister in no doubt that unless he changes course, what we face is a second wave of 80s-style deindustrialisation, 80s-style economic devastation."

The First Minister also took a jibe at former Tory prime minister Liz Truss in his speech.

He said: "Today, Sir Keir Starmer is an even more unpopular Prime Minister than Liz Truss - and that takes some doing.

"But if he does not change course on the energy profits levy, he will enter our national story as a second [Margaret] Thatcher, a second destroyer of industry, a second destroyer of communities and Scotland will not forget."

He said while Scotland's oil and gas industry had delivered revenues of £450billion to the UK Government, his country was left "high-and-dry by an energy profits levy" that is "sucking the life" out of the industry””

EnQuest in the frame?

https://news.sky.com/story/petrofac-administrators-eye-north-sea-sale-by-christmas-13479410

The interview is here: https://morningbulletin.agcc.co.uk/td/c/eyJ2Ijoie1wiYVwiOjQ5MjgsXCJsXCI6MTcyOTM1MDk5OTc2Nzc4NzUzLFwiclwiOjE3MjkzNTExODgyMTc4NzAyNH0iLCJzIjoiN2NhOTc2NTVkMzE0NmE3ZCJ9

The industry should put their best comms bods to work on this massive Freudian-slip-like blunder.

Mr PM, Sir, you are exactly right, that’s how it should be, but… Thank you for explaining this and we know we can trust you to ensure changes are made to reflect how you think things should be. Scotland, Britain, the UK, will be more prosperous and safer thanks to your sound judgement. Respect and votes.

The industry should put their best comms bods to work on this Freudian-slip-like blunder.

Mr PM, Sir, you are exactly right, that’s how it should be, but… Thank you for explaining this and we know we can trust you to ensure changes are made to reflect how you think things should be. Scotland, Britain, the UK, will be more prosperous and safer thanks to your sound judgement. Respect and votes.

Who is the analyst behind this?

https://www.enquest.com/investors/analyst-coverage

Cian Evans-Cowie? http://linkedin.com/in/cian-evans-cowie

Jeff, or , what’s …coming tomorrow?

To sign the letter go here: https://agcc.typeform.com/to/vaXGVtbx?_gl=1*1v0r3r9*_ga*MTY5MTQ3Mzk4MS4xNzYzMzgxMDgw*_ga_9WDK3D6WVZ*czE3NjQ2OTU3NDckbzUkZzAkdDE3NjQ2OTU3NDckajYwJGwwJGgw&typeform-source=www.agcc.co.uk

The government considers the OGPM fairer, more fit-for-purpose, yet it won’t be implemented until a worse system no longer, if ever, grounded in reality is triggered to cease. Tax revenue has trumped confidence and growth. It’s pointless to comment further on an absurdity.

Hoping sense would prevail, the industry has been far too reasonable and meek. The only thing which will cause Labour to listen and consider changing things is net tax revenue. Just highlighting the disappointment will not register. The industry needs to go on a coordinated and massive offensive to show where tax income is being lost. They need to list projects which will not now proceed. List the earlier decommissioning. List the tax losses which will be consumed earlier as ownership is re-arranged to enable this. Show the impact and keep a running tally on tax revenue, jobs, net oil and gas imports, and the wider economic activity for all of these.

The owners of Rosebank and Jackdaw should anticipate the government decision, save the government a decision, by saying at these fiscal conditions it is not commercially feasible to proceed.

If the industry does not do something similar, then they accept the government has been shrewd and that they calculated correctly that the companies would still proceed to invest even at these conditions. Otherwise, the industry needs to suck this up and proceed as best they can.

The government has called the industry’s bluff. Now we will see if it was a bluff.

Plans to relax restrictions on new oil and gas licences in the North Sea will be unveiled on Wednesday under the government's North Sea Strategy.

https://www.bbc.com/news/articles/c0r9gyjkky0o.amp

The problem I see is this part: “”The trade body said while there would be a “short-term reduction in production tax receipts” if the EPL changes were introduced next year, this “would be offset by sustained payroll and corporation taxes alongside wider economic gains”.”

Labour will put party before country.

It beggars belief that 5 days out from the budget the details of such a critical matter remain open for discussion. Clearly, no big changes in the plan. One can only imagine the horse trading still going on across many areas. The impression is one of indecision and ineptitude.

Up, the current EPL end date is already after the latest date for the next GE, so extending would be rather pretentious from Labour. Most likely is a new end date of March 29.

They may also want to keep a respectful gap between Miliband's pledge on behalf of the UK at COP30 to abandon the use of fossil fuels globally and any announcement which would be in contradiction to this pledge.

These guys will know a tad more than me about the situation but… whilst the EPL has caused less investment this is not, as yet, the main reason for the decline in tax/levy revenue. The main reason is the drop in the price of oil and gas. The best we can expect is, as signalled, that the EPL will change to ending in March 29, maybe some investment allowance tinkering, and the main details of the successor regime will be communicated now or soon after. Naturally, I want to be wrong. I can’t see Labour giving up the secure EPL revenue as a trade-off for more investment than already planned when this investment would not generate more tax revenue than the EPL would from now to 29. The growth aspect and risk of job and supply chain losses is less important for them, especially as I don’t think they believe the industry when it says it won’t make investments which will deliver new production from around 29 onwards. EnQuest, with its physical and tax assets, can survive and, with a suitable UK deal that post-budget, prosper between now and 29, as well as in the meantime investing for an increase in UK production from around 29.

The route to happiness? Reduce expectations!

Dumbly Downer

From 20:25

https://bbc.com/audio/play/m002m9kz