Member Info for Tigar

Hi Stevo12

Thanks for your accounting knowledge to this BB

I understand your figures on the profit payments to BP on Magnus, do you have a handle on the balance of the net of tax $600m we agreed to pay ongoing, the increased production figures in recent times must be making this look achievable?

Hi Redbuffet

With respect please stop posting your drivel about others not posting anything of value to you? your posts or of no value to this BB either.

Is this the buy backs beginning? or a deal about to be announced?

"Nobody voted for net zero " well the man in the street didn't because he would have asked how much will that cost? Parliament voted for it with no debate or questions on cost!

That is the modern way take it as fact and ridicule anyone who questions. The Emperor is wearing cloths you don't need to look. You fool.

If they are to extend the EPL in the budget that could mean it is being rewritten? I have no objection to an EPL Tax and think it is obvious it will be here for many more years if higher oil prices become the norm, Question is what changes oil industry will accept and can live and invest with. Tax credits allowable against the EPL? that would transform Enquest Then I would shout Thank You

The idea is always to buy low and sell high, we are low so now is the time for the company to BUY either itself or other producing assets. I would like to see another MAGNUS type deal for little or no cash out, just offload your problem to us we will run it better and share the profit with you? we don't take on debt for the asset only for our share of further development of it. Oh and use up our Tax credits quicker.

From a memory I think the contract runs out in 2024 so will have to look out for any new one if they need our infrastructure to sell the gas?

A Company Invests To produce a profit, three ways of paying for that investment Borrow the money, buy equipment using a Lease or issue equity and pay a Divi. Dividends are not seen as a Tax allowable expense so for a company to get the most cost effective money it has been Lease or Borrow the money. The EPL in an around about way may encourage a Divi to be paid. If my RB pay 9% but the Tax man refunds 75% why would company give a hoot about Equity holders? Just a thought.

"The company’s assertion is that the deal paid for itself in 14 months is profoundly absurd. At 6,500 barrel a day for 12 months, the gross revenue at $85 per barrel would be $200m and that excluded any OPEX, Tax or interest on cost of funding."

But production during the first 14 months was not 6500 barrels a day, so I believe Enquest are not absurd!

I do see the problem of having a big seller wanting to offload in 6 months but they have come onboard at £3.60p agreed price so will offload gradually, probably HBR will have reintroduced buy backs so will mop up many from ongoing profits all the while paying LTH a cracking Divi and accumulating value, a rinse and repeat till we own everything!

Stevo12

I would have thought Enquest will pay EPL on 100% of Magnus profits but be able to use Tax credits against 40% Tax hence why I say if we pay $80m to BP we use $32m of those losses. How BP is Taxed on the payments as they are asset sale revenue? I can no longer find the purchase agreement on Enquest website. But we Own 100% for better or worse.

I did read the Magnus purchase agreement, and from it base my view. The purchase price although it did contain an upfront cash payment was all recoverable (including that upfront payment) from the 37.5% profit share share with the $1bn cap at a 40% tax rate. meaning an effective $600m. I may be wrong but that was what the agreement said. I don't believe BP would ever pay for 37.5% of Magnus costs, we can only recover them from profits! BP does retain liability for much of decommissioning costs though.

stevo12

the $1bn cap on payment for magnus was stated as in effect $600m after tax at 40% tax rate i understood that was limited to 40% so the epl does not reduce the $600m any further. i understood the payments to bp are considered as deferred payments for the asset. enquest owns 100% of magnus and is responsible for any tax due and benefits from 100% of any investment allowances. that was my understanding of the deal i presume the $80m payment to bp is put through the accounts as gross off the $1bn so in effect is $48m cash, accountants have ways of using *** packets beyond my understanding.

Enquest own 100% of Magnus so I don't see how they could revisit the way BP is paid we already use our Tax credit against the BP profit share cap. But it is a profit share so no Debt outstanding. We need another Magnus type deal to use Tax credits without taking on Debt, yes we will pay for it through another profit share.

Romaron

Have been telling the wife what is 12" but after 50 years she still doesn't believe me. Even a liar will start to question when no one believes it.

I think the public can understand, Wind produced electricity needs subsidies to exist yet oil is taxed at 75% at production then again at 45% at the pump. Nobody explains if we all get on our bikes who will pay for the cycle lanes.

Good point a Levy? An. EPL is a Levy on exeptional profit, so why have the leveid all profit that makes it a Tax! Get the barristers arguing the point.

I would think it fair to say you can't compare UK and Malaysia they have a diff business model Malaysia is a deal we operate on a profit share we do not own so have no liability or cost of investment we just get an agreed share of profit. UK fields had to be bought and financed and we have much more liability that is why it is unfair to not be able to use past losses against EPL.

I still think the fact we are unable to offset interest and lease costs against EPL means we offset against the 40% tax that we can use our losses against so the overall tax is 75% not the accountants over 100%. EPL should be challenged in a court of law on not being able to use tax losses against as blatantly unfair.

Stevo12

I have seen your workings before and can understand the mad EPL just about? but am I right in thinking the interest and decommissioning costs are fully deduct able from the 40% tax so effectively we use up less than 40% notional tax from our credit balance, so if we ever got to the stage that we had used them up then the Tax would then be a true 75% . I hope you understand my thinking Thanks

From reading Therapists info it says clearly we have cost oil and profit oil and Enquest use the cost oil to cover the costs and then we share the profit oil and any left over cost oil and we pay Tax on that oil so unlike the EPL we recover all expenditure before we use the formular to share the spoils. I do remember that during the production hiccup we got a refund presumably as cost oil was not enough with the reduced production. That is why Enquest were upbeat about gas sales, increases in production benifit us both after cost oil. A bit like Magnus all costs are recovered before we share the spoils with BP till EPL came along. Malaysia take on the risk unlike UK government.