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yes, the solution is invest elsewhere, and move the main company elsewhere, and squeeze the existing fields here, and file for bankruptcy for the uk business as decommissioning approaches.

stevo12, great analysis. i was thinking along the same lines, i.e., "the only solution is to separate the overseas assets, trade out the U.K. existing fields with no new investment and keep the 10-15% of profits left after the tax for dividends (€200-300m). Then file for bankruptcy once decommissioning costs become due."

you are not missing anything at all.

what we are missing is a strong statement by Linda Cook announcing the stopping of investment in CCS (Hunt and Sunak can pay for them if they want; these CCS projects still have a lot of risk and they are not worth pursuing) and no FIDs in UK waters.

but, i find CEOs and companies often do not have the courage to do and say what is right,

dennis, if north eigg is a dry well you do not get 91.25% tax relief on the capex, but much less. please read the details available on HMRC manual. no time for me to explain.

danduriboy, adjusted profit is use to detemine EPL tax. interest is not considered a cost in adjusted profit, so your solution does not work.

the only way forward is to diversify to Asia, South America and Africa.

" I think that this is a compelling case for further development in the UK and not to migrate overseas. This helps to encourage the energy security and independence issues/agenda. Hunt stressed that the WFT was not permanent and would be reduced as and when commodity prices fell. "

There is no logic to the post above.
The only way forward for the UK independent oil&gas operators is to invest outside the UKNSCS.

comeonvog, the answer is only a foold would do that. Private equity invested a lot of capital in the UKNSCS. That source of funding is now going to HUNT for returns elewhere... no pun intended

The existing “energy profits levy” on oil and gas companies will be increased from 25 per cent to 35 per cent and extended from four years to six years.
There will also be a new 45 per cent levy on the excess profits of electricity generators over a certain threshold.
The two taxes combined will raise £14bn next year alone, the chancellor said.

If Linda Cook is a CEO worth her pay package she has to come out and say no more FIDs in the UKNSCS.

bensi, the correct response to the increased EPL is an announcement by HBR saying no new FIDs in the UKNSCS, and telling Hunt for him to guarantee UK's energy security himself.
Hunt is the wrong type of politician: overconfident that his views are always right...

I am sorry but this TU was very underwhelming. Rahul has ran out of options, thus the delay of the CMD. Throwing money at TEN is a waste. 2 wells in 2022 = $100M thrown out that could have been used to reduce debt.

no new on gas, and kenya is a mirage....

Rahul very much behind schedule. net debt should have been $1800M by year end given current lvel of oil prices, but with TEN performing very poorly, deleveraging is proving an insurmountable challenge.

Hi Londoner7,
I actually know the shutdown was longer than 3 weeks. And it started in late August. Yes, October data is key. Anyway, you already know my thoughts on the problem child.

Yes, I realized you were focused on the impact of the increase of the EPL. I am in no way disputing your figures.
I was only adding that the EPL overall will cost HBR around $1B. Money that will be taken away from the shareholders...
ATB

Hi Londoner7,

Thank you for your calculations.

Yes, EPL in 2023 would be above $1B, as I wrote very early AM yesterday. That assumes current oil prices and no issues with any of the major producing hubs (an aside for ENQers, HBR does not have a "problem child", which by the way had the worst temper tantrum to date in SEP according to the NSTA production data).

Investment will decrease going forward. The empirical evidence comes from the US when there were tax changes.

Anyway, Sunak just announced the construction of five more British warships (with a cost of £4.2B - yes, that is what the EPL is for) in the face of security threats from Russia. They will be powered with foreign fuel, because energy security is not a threat, apparently... LOL

ATB.
p.s. The ugly duckling did well according to the September NSTA data! But GEAD performed very poorly.

The SP is on its bike... Something is going on...

Auson, your post does not answer my question...
Yoy reply with a table of tax relief on investment, half of which already exists, so past profits were already benifitting from it.
ABEX is a capital expenditure (that is why HBR put CAPEX and ABEX together). There is no tax relief on it.
The supposed 91.25% for CAPEX needs to be qualified... if you drill a well and it is never brought into production you do not get 91.25% tax relief of that expenditure, but less than half of it.
And invest to get new production going in the UKNSCS is actually to make more assets whose production will be taxed as if it were a nationalized asset...

Anyway, could you or wellintervention explain how 75% of (profits + finance costs + abex) is really not relevant?

Wellintervention, "As HBR O&G hedges expire overtime, resulting upside potential here makes any reported UK windfall tax rises totally insignificant."
I am not sure how you do your calculations. Could you explain how 75% of (profits + finance costs + abex) is really not relevant?

Profit before tax* means, in the context of this report alone, profit after interest, income and foreign exchange operations but before tax, depreciation and amortization.

the profit figure is meaningless...

sekforde, finally someone says it. my back of the envelope calc also put it above $1,000M, that is $1B. is this not nationalization by stealth?

banburyboy, you are correct in the sense that what i wrote about CT was misleading as I wrote it.

I know what the Ring Fence Corporation (RFCT) tax is (30% and constant since 2002!) . I care about the sum of the that with the Supplementary Charge, which has been adjusted a few times often in the last 20 years.
Government is going to change WT, but let us hope that as you say "The chances of 1 and 2 changing are low but it possible" they do not change 1 and 2 next with the pretext that mainstream CT is changing. I am expecting it to change!

banburyboy, the last time I heard the news on that specific aspect, there was no denial that the 19% to 25% would not apply to the O&G as well.

For the others who think investment will just stay the same with an increase in the EPL. Read a study by the Kansas Fed, "There is empirical evidence from other countries when the tax rate went up: Investment decreased! Example of a study about the U.S.: A $1 increase in tax leads to a decrease of at least 8% in the wells drilled!)"

Capital will look for opportunities elsewhere. HBR should not be irrational and do the same.

"There will, for sure, be renewed M&A activity as current NS players look to mitigate EPL."
Mitigation of EPL in the short run is an irrational strategy, as you are just pushing the pain of the taxes down the road. There is empirical evidence from other countries when the tax rate went up: Investment decreased! Example of a study about the U.S.: A $1 increase in tax leads to a decrease of at least 8% in the wells drilled!)

Private Equity which underpinned most of O&G Capex in the the UKNSCS outside the majors will invest its cash elsewhere going forward.

"HBR wft bill by somewhere between 100 and 200m ie up from the current 400m to 600m. It equates to one months cashflow. Surely HBR can find a North Sea project to sink 600m into over the year?"
Tax relief is not 100%... Your calculations are not correct. But I won't bother posting mine, so that you can understand that a 75% to 80% (because coroporate tax rate is also going up next year) tax regime is not a viable environment. It is called nationalization by stealth.