Related Articles
Forward article link
Share PDF with colleagues

An M&A lifeline in the North Sea

Assets that cut tax bills could be a blessing for UKCS operators looking for a bargain

Deferred tax assets (DTAs)—assets on the balance sheet that can be used to reduce taxable profits—can be a valuable prize for a prospective buyer of an oil and gas company on the UK Continental Shelf (UKCS). Oil and gas companies operating in the UKCS typically accrue substantial DTAs in their exploration, development and early producing years. This is because significant capital expenditure is normally needed for exploration and development, which can result in capital allowances—the UK tax equivalent of depreciation. This spending is generally funded, at least in part, through debt. Interest on that debt may be deductible in calculating UK taxable profits. DTAs can be valuable to a buyer

Also in this section
Saudi Arabia pushes ahead with IPO
22 March 2017
The state firm is making the right noises about its privatisation, but the clock is ticking and market fundamentals could still shift
Depth, breadth and data
15 March 2017
Fresh from the merger with Baker Hughes, GE Oil & Gas boss tells Petroleum Economist about his firm's plans for digital analysis, cost-cutting and recovery
Trying to right the Petrobras ship
8 March 2017
Brazil's oil major is on the course of recovery, but has a long way to go