LONDON (Alliance News) - Trinity Exploration & Production PLC said Friday that it would benefit from new tax rules for oil and gas companies working in Trinidad and Tobago, where the company's operations are focused.
The country's 2014 budget statement, presented this week, makes a number of changes including bringing in greater flexibility on how investment tax credits can be used and more generous capital allowances in some areas. Changes are effective from January.
The company said that the new rules would improve cashflow and boost returns on future projects, allowing more investment in exploration and development.
The key changes which would affect it were as follows, the company said:
| Current | Revised (effective January 2014) |
Investment tax credit | · Tax credit of 20% on capex | · Unchanged |
| · Tax credit can only be used in year incurred | · Unused credits can be rolled forward for one year |
Capital allowances | Exploration · Initial allowance 10% · Annual allowance 20% reducing balance |
· 100% of cost to be written off in year incurred |
| Development · Intangible expenditure o Initial allowance 10% o Annual allowance 20% reducing balance · Tangible expenditure o Initial allowance 20% o Annual allowance 20% straight line |
· Intangible & tangible expenditure o 50% in year 1 o 30% in year 2 o 20% in year 3 |
| Workovers & Qualifying Sidetracks · Deduction of intangible costs incurred |
· 100% deduction of all costs incurred |
"These progressive fiscal reforms endorse Trinity's strategy and philosophy of operating and investing in Trinidad. The increased return to the Company will assist in driving project economics and delivering greater shareholder value through increased activity levels, " said Trinity's chief executive officer, Joel 'Monty' Pemberton.
The company operates all of its licences and has 2P reserves of 36 million barrels. It is targeting 5,000 barrels of oil per day in production by the end of 2013.
Shares in the company were trading down 0.50 pence, or 0.4%, Friday morning at 112.00p.
By Philip Nye; philipnye@alliancenews.com;
Copyright 2013 Alliance News Limited. All Rights Reserved.
Trinity (TRIN)