Q1 - 2024, page-196

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Mitchdon

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23/02/24

16:17

Post #: 72565189
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Originally posted by Hotfire: ↑

Market hates uncertainty, however at current market cap many will take a punt.

Reading a bucket load of UK stories regarding Keir Starmer's intentions, I think this is normal politics, where you fire a cannon and wait for the reaction, before conceding some ground.

In my view, based on my readings,

1. He will not rip up existing oil and gas licenses.
2. It has already been stated that he has dropped plans to backdate the windfall tax on oil and gas producers to the start of 2022
3. He has stated that work in the North Sea oil and gas sector will continue “for decades to come”
4. He will raise the current tax on excess profits from 75% to 78% until at least 2029.
5. He will cut investment allowances and ban new drilling licenses.
6. However headline grabbing, the promise of running down North Sea Oil & Gas might have been a few of years ago, it is a lot less so now with significant parts of the oil & gas producing world in turmoil.

In short if we have a license, then it is still valid "for decades to come".

If we jag additional licenses in the next round, prior to the election, then they will be valid "for decades to come".

If no new licenses will be permitted, doesn't the existing licenses suddenly become more valuable?

If RR continues to proceed then its still financial viable, even with an added 3% tax. The investment allowances are there for the taking now, will they walk away from that?

We await.

Expand

The increase in the EPL from 75% to 78% isn't a showstopper, it's the move to kill the investment allowance that will turn RR off. They were happy to fully fund the project knowing that 91% of capital costs could be claimed back against current production tax under the EPL. Under labour they have to fully fund capex and pay 78% tax on profit.

If labour continues down its proposed policy path it will lead to current production being reduced or stopped and zero new projects coming on line. I don't know how far down that path they need to go before realising the mess they will cause.

HHR Price at posting: 1.3¢ Sentiment: Hold Disclosure: Held
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