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"A spokesperson for the Treasury said: “Our permanent oil and gas tax regime is globally competitive and our approach to taxing profits from oil and gas exploration balances attracting investment with ensuring a fair return for the nation for the use of its resources."
“That is why the more investment a firm makes into the UK, the less tax they will pay under rules within our Energy Profits Levy, which is expected to raise £17 billion this year and the next to help fund cost of living support for eight million people.”

Now, how stupid does the treasury's spokesperson think readers are?... If the investment allowance tax relief made a difference in mitigating tax increases, the tax intake would not be £17B, when last year it was £1.4B. So, the oil&gas sector is paying an extra £15B this year.

"A spokesperson for the Treasury said: “Our permanent oil and gas tax regime is globally competitive and our approach to taxing profits from oil and gas exploration balances attracting investment with ensuring a fair return for the nation for the use of its resources."
“That is why the more investment a firm makes into the UK, the less tax they will pay under rules within our Energy Profits Levy, which is expected to raise £17 billion this year and the next to help fund cost of living support for eight million people.”

Now, how stupid does the treasury's spokesperson think readers are?... If the investment allowance tax relief made a difference in mitigating tax increases, the tax intake would not be £17B, when last year it was £1.4B. So, the oil&gas sector is paying an extra £15B this year.

upomega, "researchers from anti-fossil fuel campaign Uplift calculate that...". Well they have an agenda, and their calculations are wrong. ABEX is ignored, for example. Interest costs are excluded.
A further simple example: CAPEX in North Eigg. If it is not brought into production tax relief on CAPEX even with the new regime is less than 50%. Uplift assume all wells strike commercial oil&gas and that ABEX is not a capital -related expenditure.

Flabby, correct. I will vote against them at the next aGM, if they fail to look after shareholders.

It is about stopping investment, not production. return capital to investors and/or invest overseas. And have the courage (which many CEOs and Boards lack - i know this from experience...) to say it loud and clear. Relinquish licences for exploration. Better returns, elsewhere.

Let us see if Linda has the courage to announce no new FIDs going forward under the current tax regime. These are the moments when CEOs need to show they are up to the task.

DennisThePennis, the problem is that they do not have the balls. after the imposition of EPL in May, not a single company stopped any investment. I always thought that (stopping investment) was the rational decision to deter further messing up of the tax regime in the future. But all the oil companies came out and said their future was in the UKNSCS, which was plain shortsighted. So, here we are w/ an increase of the EPL in sight.

None of them have any balls. The boards are filled with meek people. Perhaps time to hire as Manchin (West Virginia) type of person.

Rookie1, corporate tax rate in Mexico fr oil&gas is 30%. Contracts are structured different as often they follow the PSC format. But this is all about a stable fiscal regime. You just want to know wht you will get when you invest. The proposed increased EPL makes many projects that have only started production recently loss making. the decision to go ahead was made under a different tax regime. With the nex tax regime they are not viable.

Ahojj, Did I ever deny debt reduction of $1B so far. I did not. Do you think debt reduction will continue at any decent pace if government taxes 75% of adjusted profit (i.e. 75% on profit + interest expenses). It won't. This is nothing about being positive or negative. It is only about knowing how to multiply an amount of money times a percentage. Easy as that.

Obviously, the government is not listening, because after the imposition of EPL in May not a single company stopped any investment. I always thought that (stopping investment) was the rational decision to deter further messing up of the tax regime in the future. But all the oil companies came out andd said their future was here, which was plain shortsighted. So, here we are w/ an increase of the EPL in sight.
Now, is the time to come out and say:
- CCS spending will be stopped (after all there is no investment rebate associated with spending on it)
- No further FIDs in the UK while the EPL is in place.
- All new CAPEX commitments will be redirected to Mexico and Asia. The strategy going forward is to increase production outside the UK and decrease production here.

An anouncement loud and clear needs to be made.

p.s.: The 91.25% tax break allowance for investment, is not what it looks. It ignores ABEX. CAPEX in wells that are not brought into production does not attract that headline figure, but less than half of that. And it can be removed at the drop of a hat, after the company has already contracts in place to develop fields. So, totally unreliable to think it will be there.

racksonracks is correct. TEN's geology is proving to be a challenge: "the partnership drilled the second of the two riser base wells (NT-11) to define the extent of the Ntomme reservoir supporting further development of the TEN fields. The well encountered approximately 5 meters of net oil pay with poorer than expected reservoir quality." So far Ntomme is not going anywhere... (not sure any monet spent on it is money well spent). And that is not good news. TEN was supposed to deliver 27Kboepd in H2, as stated in the HY earnings presentation. If it delivers only 22Kboepd, then it will fall short of the headline figure. If TEN's Ntomme wells delivered good news, the uncertainty about Tullow being able to pay back its debt would disappear very quickly.

GENL needs to diversify for its SP to re-rate. Very disappointing that drilling in Morocco keeps getting postponed. Ditto of Somaliland.

Investing more in Kurdistan, i.e., in new fields, is not the way forward.

As the non-recurrent payments will come to an end, and as I wrote a few weeks ago ("The RNS with KRG payments for the month of June released is showing $30.2M of recurring revenues. Assuming H2 production delivers the same production numbers, revenues will decrease to a figure above $25M at current oil prices.") recurring revenues will come under $30M/month. How low will they go?
For that we need to understand the PSC:
https://gov.krd/mnr-en/publications/contracts/

https://govkrd.b-cdn.net/Ministries/Ministry%20of%20Natural%20Resources/English/Publications/Contracts/A%20New%20PSC/report%20by%20Dr%20Pedro%20van%20Meurs.pdf

As cumulative revenue over cumulative cost goes up the share of "profit oil" to KRG goes to 85%. At some point it will get there, but there is still a lot of cost recovery to take place before reaching those levels. So, it is possible that the share of "profit oil" to GENL is still close to 25% at the moment.

Going forward w/ current proction levels annual revenues under $300M.

Production highlights:
- High activity levels in Tawke/Pershabir this year. They will continue next year.
- New drilling at Taq/Taq after a 2 year hiatus. What will add to production?
- Sarta 6 results are key to production, but will not be close to what was "guided in the past"
- QARA/DAGH will be relinquished.

Net cash went from $141M to $181M having. But $18M in dividends to be paid in October. If they expect to have >$500M gross cash by YE 2022. This means net cash of > $225M by YE.

Buy back more bonds (as net interest payments still amount to $17M/year) and get cracking in Morocco is what I would like to see.

Indeed, spindok. The most likely outcome is that we won't get the outsized returns we would otherwise get and the company will be taken over by a big player.

Why would anyone suggest buying more UK based production assets? (ENQ's WI footprint in Malaysia is less than 15% of its overall production).

The message from Labour and Conservatives is clear. Oil&Gas is to be taxed as much as possible.

HBR's only viable strategy is to invest its FCF elsewhere: Indonesia, Mexico, etc. Perhaps even buy Tullow that operates in Ghana, or any other companies operating elsewhere.

Any further investment in the UK North Sea CS is simply a misguided strategy.

Indeed marging with CHAR and have the courage to sperak to the press and tell Sunak to get lost. Not one more investment. This is the same Sunak who promised the EPL would lapse in 2025. Now being extended to 2028? He is a nasty liar.

Yes, that is the reason as to why UK producing oil&gas companies are uninvestable, until they diversify their assets. As i have written all along, anyone who understands the basics of incomplete contracts (the government and the political class have now decided that it can tax oil&gas whatever it wants at any time it wants, and is unwilling to stick to clear and long horizon tax rules) realizes that the UK government cannot be trusted, and therefore companies should not invest in the UKNSCS.

All they invest will be taken away via increased taxes. Best way is to run down the existing producing assets, pay the taxes, and use whatever is left to diversify the production base.

I do hope SQZ's board wake up and smell the coffee!

the FT writes that Jeremy Hunt is likely to extend the government’s windfall tax on oil and gas producers beyond its “sunset clause” in 2025, helping to close the fiscal hole in the next parliament, according to people briefed on his thinking.

Hi all,

The RNS with KRG payments for the month of June released is showing $30.2M of recurring revenues. Assuming H2 production delivers the same production numbers, revenues will decrease to a figure above $25M at current oil prices. So, that is ok for cash accummulation purposes.

As for the "override" revenues received for April, May and June, they amount to $12.7M, $14.4M, and $15.5M (thus a total of $42.6M). I am still expecting this to add to close to $60M by the time the arrangement comes to an end with the July production payment.

What is confusing is the statement: "Genel was owed $120 million, excluding interest, for deferred receivables from the KRG for oil sales from November 2019 to February 2020, and has now received $117 million." The MAY related payment stated "Following the receipt of the receivable recovery payment, Genel is now owed a nominal $46 million from the KRG for oil sales from November 2019 to February 2020." Thus, the June related payment of $15.5M would suggest that KRG still owes $31.5M... But the wording used in the most recent RNS suggests KRG are possibly trying to get away with renegotiating a lower interest rate on the amount of money they owe, and GENL IR are doing their best to confuse us...

Anyway, until GENL finds a production hub in a different location its SP will be foreve reflecting a very high level of political risk.

ATB

I assume the next TU will be in early November. Has anyone seen any recent industry news relevant to BREE?

Hi Jan,
Hope you are well.

In H1_22 FCF was $332M. That is $55.(3)M per month. Not quite $60M. I was talking about FCF monthly average across one year. In a semester like H1_22, ENQ spend littel on CAPEX and ABEX. And it did not pay any EPL.
If you look at the accounts there has not been a single year with FCF of $60M/ month.

You write; "As long as production keeps around the 48k bpd or more, we will see fcf of 55m month for H2 ."
That means another $330M of FCF in H2. I am not talking about debt reduction, which has been helped by the GBP demoninated debt being worth less in USD given the free fall of GBP.
In January/February 23 we will find out. (Bear in mind that production in GEAD has underformed the (C)PR projection by 2Kboepd this year, and that the problem child, aka Magnus, has been performing poorly for close to 2 years now. I remember reading many posts in November/December last year saying that Magnus was for sure fixed and that all would be great with it in 2023. Has is happened? No. They fix one thing in Magnus, and something else breaks down.

The good operational news have all come from Malaysia, and that is where ENQ should be investing in CAPEX.

Now that the HYB has been renegotiated, I do not have anything to add to the BB until 2023. Enjoy the rest of 2022.

ATB and GL.

ATB