Member Info for NewKOTB

Fernan,

Fair point, however should the licence exceed our's and the companies expectations then it will be a miracle, if not the 8th wonder of the world for our asset to remain (75%) in our hands, let alone being able to get to first gas.
atb

aimo & dyor

Wonder how many of the top 10 would like to reduce their tax bill by an acquisition that will then also reduce their levy by implementing our 'drill ready' developments too.

https://www.reuters.com/markets/commodities/uk-tax-plan-incentivizes-oil-gas-producers-pump-more-fossil-fuels-2022-05-26/

aimo & dyor

Loophole could let North Sea oil and gas giants slash UK windfall tax bill.
Sun 29 May 2022 08.00 BST

Critics warn chancellor Rishi Sunak will raise only a fraction of planned £5bn if firms offset new investment against profits

North Sea oil and gas companies that already benefit from huge tax breaks could use fresh rules to slash how much they pay under a new windfall tax announced by Rishi Sunak as part of his £15bn cost of living package, according to a thinktank.

The chancellor risks raising a fraction of the £5bn he expects from the complex scheme – which allows the cost of new investments to be offset against profits – should oil and gas companies take the opportunity to dramatically reduce their contribution to the exchequer, said the left of centre Common Wealth.

Christine Jardine, the Liberal Democrat Treasury spokesperson, said Sunak’s “11th hour” 25% windfall tax on oil and gas company profits allowed them to carry on “with business as usual” and direct most of their profits to shareholders.

“It’s bad enough that the chancellor waited until the 11th hour to tax big oil and gas, when Liberal Democrats first called for a windfall tax last October. Now it looks like it may not even raise what he said it will. That’s more levy lite than windfall tax.”

She accused the chancellor of “going soft on huge companies making a killing out of a crisis”.

Common Wealth said North Sea oil and gas firms currently benefited from a range of subsidies to cover the costs of extracting new wells and decommissioning ones that are spent.

The Treasury has not calculated how much of the £5bn in extra tax could be lost if North Sea operators claim extra investment allowances over the next three years.

Q2 to date NBP average spot continues to fall ... now down to 127p from 130p/therm

Q3 2021 - 119p
Q4 2021 - 226p
Q1 2022 - 232p
Q2 to-date - 127p

I'm still unable to find details on what these 'normal levels' are .... Rishi stated, "It is temporary and will be phased out when oil and gas prices return to historically more normal levels...". The biggest problem with the levy is total lack of clarity on key metrics eg 'normal'... So we have to assume the levy will be with us until 1/1/26, that alone is enough to drive investors away, and if NBP is still above 'normal' then, think you can guess what will occur !!!

Come voting, I will be looking more closely at alternatives to the big two.

aimo & dyor

Interesting to re-listen Mitch's twitter space with Alexander Stahel "CEO Mitch Flegg talks Serica Energy, the UK oil & gas pure play." esp after Thursdays announcement. Particular point of interest at 1:15

https://twitter.com/i/spaces/1rmxPgQBErmJN?s=20

What makes Thursdays announcement even more ludicrous is the fact that NBP spot has cooled off significantly this quarter.

Q3 2021 - 119p
Q4 2021 - 226p
Q1 2022 - 232p
Q2 to-date - 130p

btw, UK O&G listed stocks with exposure to overseas operations will do well out of Thursdays stupidity.

Forward looking ..... now the main reason Erskine and later BKR (aside from IOC) were acquired from BP was they were late life troublesome fields that needed love 'n' attention and producing little reward ££ for BP in the grand scheme of things. With the additional levy and likes of Shell / BP et al backing out of the NS for some years now, question is how many more of these fields have now sudden become much less / borderline profitable.

What did ever happen to disposal of Andrew, BP's been very quite on that front recently after it fell through!

aimo & dyor

Naive1,

Morning,

With the WTL you are assuming vast majority of the levy will not be 'managed'. SQZ I would hope, ensure all available options are explored so we off-set the levy best as possible with NS CapEx & investment ( N Eigg and workover's would take care of majority in Y1, 2022 as its only for 9 months profits, forward looking as of announcement) with follow up drilling & infrastructure in 2023-2025 ... In the meantime, invest majority of our £400m cash overseas into an accretive assets where 'U' turn government can not cripple a whole industry by pandering to Joe Public and get 'one over' on Labour.
If the first years tax levy made little to no revenue for the government, now that would be ashame (lol).... may even force a re-think or a 'n' turn !

PS "in return for an extra 25% share of the profits.." would probably not be paid as by Dec 2025 sunset clause comes into play after which time I would guess 'profits' would start to flow from Eigg, although I would hope Eigg to be producing at some point in 2025. So yes, get UK gov to foot the CapEx bill for next 44 months then SQZ can reap the rewards of one would hope a +60mmboe field producing an additional +20kboepd to our already ~30kboepd

AIMO & DYOR

That award of millions £ in free LTIP shares announced last week at ~680p looks mighty unlikely atm, but so do the 235p ones issued last year .... so expect our board to release an RNS to ensure their 2021 LTIP's are safe.

aimo & dyor

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

https://www.gov.uk/government/publications/cost-of-living-support/energy-profits-levy-technical-note

Mommur,

We do of course as you pointed out have Licence P2400 Skerryvore – Blocks 30/12c, 30/13c, 30/17h, 30/18c & Licence P2402 Ruvaal – Block 30/19c to consider too ... Parkmead as Skerryvore operator will surely be spending cash on their licences, we also have Ruvaal. More CapEx to off-set .... loving it !!
Downside is the service provider / rig's will be costing more as demand increases and availability reduces ... oh more costs to off-set...

Tom Cross .... hummm not sure but we do need new blood I feel.

aimo & dyor

SP,

Agree, there are only so many 'live' options for NS CapEx and investment, fields can not just be picked like plums off a tree and turned into jam tomorrow ... years of planning and development not to mention financing would mean as you say only current players with current plans would be in a position to reclaim tax within the 30 month window. Rest would, not knowing how long this 'temp' levy will last as it may well be extended, will be looking overseas, towards Norwegian waters in the first place I would have thought. The NSTA 2022 licencing round will be swallowed up for no other reason than to off-set licence cost against tax, maybe run 3d's too, field development will be zero thereafter imo. Commitment to drill is usually 3 years after licence award licence award not nearly enough time to take advantage of super-deduction.

However, SQZ are in a great place if they play their cards right for a Bruce'e Bonus after gaining Out of Round offer for two blocks 3/24c & 3/29c (Eigg) and massive blocks off Rhum to the west, Blocks 3/25b, 3/30, 4/26, 9/5a. Plenty of expenditure opportunities to keep the new levy to a minimal and develop our assets. SQZ have the means with plenty of cash, do our board have the drive and ambition.

https://itportal.ogauthority.co.uk/eng/fox/oga-report/PED300X/offshore-licence/?LICENCE_TYPE=P&LICENCE_NO=2506

aimo & dyor

rexfactor,

Yes, I'm sure that was their thoughts .... lol, nothing like a carrot 'n' stick approach and this is nothing like it ... more a pistol to the head and Do Ya Feel Lucky approach !!

lol even more ... another account shows ...

"you have an Entitlement to 3549.173816 CHARIOT LIMITED ORD GBP0.01 shares at a total cost of 63,885.12 GBP....."

BDC,

LOL .... On one of my Halifax accounts the 'offer' is as follows:

"..you have an Entitlement to 700.736718 CHARIOT LIMITED ORD GBP0.01 shares at a total cost of 12,613.26 GBP."

And these are the guys who we trust our cash and investments with ..... ffs.

Yes, I had $713m earnings before tax ... panic and hysteria will subside and value hunters will be back in force.

How has yesterday announcement impacted on their target price of 600p issued last month ?

Rishi the shark appears to gobble up the hands that feed him ....

Ironic, we waited 5 years and in less than 5 months into our 100% BKR this happens ...

Given time and right mgt SQZ will recover imo.

GL,

No NS player will want to invest, or indeed be able to at these NBP ... taking on debt will be out of the question as that will soon be at silly rates ... Rishi has just thrown a ticking time bomb right into the middle of the NS ... WT introduced to save their own skins, nothin more ... notice how quite Kwasi Kwarteng has been.

What's the gov intention here, drive the small players our of the market, nationalise the industry .... Labour must be thinking, bl00dy 'ell .... how can we match that, they are more Labour than Labour.

aimo & dyor