RE: ICSID Latest29 Feb 2024 23:18
Rock, rightly imo and that of the legal advice taken, believe there is no tax to pay, on a $670m carry that never happened.
It is unlikely I feel, that FIG would try and use the monetisation of the OM award as a bargaining chip, as even if there was tax to pay on a $670m carry that never happened, FIG would only get it if Sea Lion got to production, so it is in FIG's interest to get SL into production.
Also the carry tax would be irrelevant compared to the tax and royalties from 300m + bbls of oil.
'Given the highly material nature of this judgment, professional advice has been sought to confirm that it is probable that if challenged it would be concluded that the Group is entitled to adjust the outstanding tax liability for the Development Carry that has become irrecoverable. As such, in the prior year, the Group derecognised the tax liability to measure it at the most likely amount that the liability will be settled for of US$nil. We are currently engaged with FIG in relation to formalising the tax implications of the termination of the 2012 Premier Oil farm down which resulted in an irrecoverable carry amount of approximately US$670 million.
Should it be proven that there is no entitlement to adjustment under the Tax Settlement Deed then the outstanding tax liability would be £59.6 million and still payable on the earlier of:
(i) the first royalty payment date on Sea Lion;
(ii) the date of which Rockhopper disposes of all or a substantial part of the Group's remaining licence interests in the North Falkland Basin; or
(iii) a change of control of Rockhopper Exploration plc.'
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