DEO Petroleum, the AIM-listed oil company focused in the North Sea, has welcomed this week's governmental Budget, which looks to encourage additional investment in the UK Continental Shelf.
Chancellor of the Exchequer George Osborne announced on Wednesday a package of oil and gas measures to secure billions of pounds of investment in the oil and gas industry in the UK.
According to the official Budget statement, these include: "a contractual approach to offer long term certainty on decommissioning relief; extending the amount and scope of the existing small eld allowance; introducing a new eld allowance targeted at the West of Shetland area; and introducing primary legislation to allow the potential introduction of measures to support investment in brown-elds."
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DEO said that these changes are expected to directly affect the company, in particular the new small field allowance against the current supplementary charge rate of 32%.
"This is more encouraging news from the HM Treasury that will directly affect DEO, and is an encouraging demonstration of the government's commitment to attracting oil and gas investment in the North Sea," said DEO's Chief Executive Officer David Marshall.
DEO's tax payable is expected to reduce by £25m over the life of its Perth Field as a result of the proposals. Perth Field Phase One recoverable resources will now be below the new and increased minimum threshold set by the government (45m barrels of oil equivalents), meaning that it will benefit from the full amount of its 52.03% share of the increased field allowance of £150m.
Despite the news, shares fell by 1.74% to 28.25p in early trading on Friday.
BC
