CUE maybe affected with the RSPTThey may choose to swap to...

CUE maybe affected with the RSPT

They may choose to swap to it.

The big negative of the RSPT versus the PRRT is the rate of return.
PRRT
on exploration costs - longterm bond rate(LBTR) + 15%
on development costs - LBTR +5%

RSPT is calculated at just the LBTR

But - the big positive of the RSPT is that the deductions are transferable where as the PRRT is calculated per project.

Therefore,

CUE may elect to transfer to the RSPT (which is irrevocable)
The advantage is clear for CUE.
Scenario
Artemis is proven, developed and is a producing asset by 2015. Due to start paying RSPT 2020.
Caterina is proven 20tCF and development starts 2020 involving a $20billion capex program.
With the RSPT, CUE can take the development expenses and claim them straight away and would continue not paying RSPT for several years - providing a cashflow benefit.
Obviously it could do the same for all exploration expenses that are also under the RSPT.

With PRRT - the deductions have very limited transferability and are treated per project.

Obviously beyond cashflow mechanics are the risks.
If CUE remained under the PRRT - all deductions are subject to the risk of that project returning a profit.
So using the above example - the $20billion worth of PRRT deductions are at risk that that project returning a sufficient profit.
Whereas - under RSPT the deduction would be transferred straightaway.

Then compare to MOG.
They have one asset worth talking about - Artemis.
(Cornea and Braveheart aren't in the same ballpark)
They may choose to stay with the PRRT not expecting another asset to come within a bull's roar of Artemis.
With nothing significant that they can offset the RSPT with - it maybe prudent to stick with the PRRT.

Same for KAR
Their focus is three assets.
One in Aust, Peru and Brazil.
Without a second Australian asset of note coming too soon - they may also be better off with the PRRT.
Even though they have other reasonable assets in Aust in the pipeline.

Please note - I have not run any comparative costings for the RSPT versus the PRRT (too busy with newborn and chatting with EL)
I would like to hear from anyone who runs any modeling on this.

Imagine the spin from Rudd if a O/G company actually signs up for it?

EL- stop reading that hippy greenpeace spin and log into something that ends with "gov.au"
It is impossible to expect any tabloid to explain this tax properly.
Politely now - the PRRT clearly designates that LNG is a processed product.
Do you have any reference to LNG being considered otherwise for the RSPT?
Also - I believe the condensate grab was based on the fact that it was bypassing royalties of the day.