Member Info for mrc_mrc_mrc_mrd

Marine Clark - what impending news is that? The same news that has been impending for 5+ years? And has now been outsourced to the city boys (a dubious outfit, very happy to enrich themselves)

I wouldn’t sell my shares based on this. Is it really new news that U.K. politics is unstable? Or that Rishi Sunak will do what he thinks is popular?

I don’t like the EPL but if we do invest (as I believe AB would want to anyway) then the impact is negligible.

https://www.theguardian.com/business/2022/oct/30/britain-faces-100m-loss-over-drilling-at-biggest-new-oil-field-says-research

The headline is ridiculous. If you actually read the content Equinor make a very good case. I haven’t read the WWF report.

According to the Guardian the government will be a net contributor to new oil and gas projects. It’s a nice headline for their audience.

After the mid terms I expect that the POO that prompts SPR release will be at a higher level.

Ah so it was the Swedes panicking!

Exactly Tigar

Gas is where the billions in EPL will come from.

It’s really not very difficult to do your own calculation for ENQ. We know roughly what the profit will be, and assume that as a minimum all “capex” will be allowable.

What a pointless and misleading post L7.

Thanks Robs. That is a substantial decline rate.

Let’s hope these new drills work out and stem the losses.

Marineclark - looks like you called the bounce wrong.

VoR - it’s Friday and I’m not 100% sure I am right…but, if you consider our tax losses. Say 3bn.

That is not 3bn in tax that we don’t have to pay as it arises, it is 3bn in profit we can offset against it. At 40% that is worth 1.2bn.

The EPL is exactly the same. All it can do is reduce taxable profit.

All the investment allowance is designed to do is give you back what you would have paid in EPL on that portion of the profit (well, 80% of it). Basically that spending is not subject to EPL.

Anyway, enjoy your weekend! it all matters little in the scheme of things! I think we can agree that EPL is not that big a deal for ENQ whoever is right.

EPL does not operate like that though.

The investment allowances reduce taxable profits. It works like your personal allowance for PAYE.

https://www.nstauthority.co.uk/media/8210/the-energy-profits-levy-v1-june-2022.pdf

“an investment incentive. An ‘allowance’ will be generated on investment expenditure (capital expenditure and some operating and leasing expenditure) at 80% which can immediately be used to reduce profits subject to the levy.”

I’m in agreement with that VoR but that is not what your example says:

“So then we go to 25% epl - lets say you have profit of 300m - so 25% is 75m - but you have drilling costs of 100m - just use 80% write off potential for simpicity - thats 80m you can use to completely negate your epl of 75m“

I think in your example that drilling costs would need to be £375m to fully mitigate EPL. That would give you a 300m reduction in your taxable profits and zero tax would be due.

The 80% allowance reduces Profit subject to the levy, it does not reduce the levy charged on pre-allowance profit.

OK, just to show how completely confused I am, I’ve had another think and a read of the fact sheet.

Is the allowable investment not just deducted from profits? So if a profit of 400m is made and allowable investments are 100m (80m deductible) then 25% of 320m will be due in EPL?

When I do my company tax return my allowable expenses reduce my corporation tax liability by reducing my taxable profit. But I still get taxed at the headline rate on any profit remaining. So for me, unless your allowances reduce taxable profits to zero then you will still pay EPL.

My thinking was that of the 75m tax due in your scenario VoR, investment allowances would only let you avoid 80% of that. So tax due would be £15m.

In Bastans scenario £20m would be due.

In Shells case they are claiming not to have made a profit from U.K. upstream operations. Therefore EPL cannot be applied as there are no profits to tax…seems pretty crazy to me.

Bloomberg are saying Total will pay 600m for 3rd quarter in EPL. This seems like a lot!

Dumbly - see the government fact sheet. I have no idea how Shell have avoided all EPL because they can only offset 80% against allowable investments.

https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-factsheet-26-may-2022

Enquest are now free to take advantage of the allowances. The heavier mpact of EPL on ENQ pre-financing was because we couldn’t invest our way out of it as we needed to record a profit to pay debts.

60p party to follow in the spring after announcement of dividends / buy backs

From memory our moves tend to be a slow build of ~5% a day then a couple of really big days.

I would be happy if we trend up for the next few weeks then a couple of blockbuster days after the ops update. Then we just need a bit of a Santa rally to win me Romarons prize at 58p (I think!)

Lol, none of your winnings going to charity BTFATH1?

It sounded like you might be struggling to pay the bills yourself based on some of your bleeding heart posts?

No doubt we will see you again when you buy in at a much higher SP.

Underway IMHO.