Hi @hhonner, if the government dropped the entire EPL, so the...

Hi @hhonner,

if the government dropped the entire EPL, so the Windfall tax AND the investment allowance HHR and RR would be better off. I have run the cashflow with it dropped entirely and its still a viable project.

The problem is that Labour want to increase the windfall tax from 75% to 78% which isn't a major problem. The major problem is that they want to remove the Investment Allowance. RR's nett capex cost increases by nearly $200m if they cannot claim the Investment Allowance.

Until either Labour amend their policy, Labour lose the election or current projects like ours are allowed a grandfather clause on the current tax scheme IMO RR won't want to move forward with the project.

While there still is a 12 month window until the next election there is no way to squeeze Phase 1 capex into that window.

Every developer is facing the same tax issue and the potential is there for most projects to be deferred until the tax situation is resolved. Labour will need to re-think their tax position or face sending the O&G industry off a cliff.

I love your point about HHR promoting the tax position when it was positive but saying nothing when it goes to sh#t.

The only shining light is that this issue is a whole of industry problem not a project specific one. If it is resolved then I agree with you HHR would return to the 2.2-2.8 range it was trading at.