Unitisation of petroleum project interests

2015 ◽  
Vol 55 (2) ◽  
pp. 497
Author(s):  
Wee Kenneth
Keyword(s):  
Oil And Gas ◽  
Development Project ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Resource Base ◽  
Resource Rent ◽  
Petroleum Resource ◽  
Key Issues ◽  
The Impact ◽  
Fiscal Implications

Traditionally, the unitisation of oil and gas project interests involved the exchange of legal ownership interests between project proponents to achieve uniformity of their licence interests across the project. Recently, more contemporary and creative forms of unitisation have emerged including economic, beneficial and contractual unitisation approaches that do not necessarily involve the transfer of legal title interests. Unitisation is a way of pooling resources to improve the likelihood of an economically viable project for participants and to overcome practical challenges resulting from uneven interests in the component parts of a broader project. In some cases, unitisation is the catalyst for project sanction. Achieving agreement and alignment on the most equitable unitisation outcome, including the valuation of the relative resource base and ownership stakes, is not easy. It involves navigating a myriad of legal, commercial, operational and financial considerations. A project residing in both federal and state waters can add increasing layers of complexity due to the interaction between overlapping federal and state jurisdictional and taxing rights. This extended abstract discusses key issues arising in various unitisation models and considers the associated fiscal implications from income tax, capital gains tax, petroleum resource rent tax and royalty perspectives. It also examines the government’s announced tax measures for dealing with the swapping of interests or interest realignments resulting in a common development project and the impact and effectiveness of these rules on unitisation arrangements.

Tax issues impacting acquisitions in the Australian oil and gas industry

2011 ◽  
Vol 51 (2) ◽  
pp. 669
Author(s):  
Chad Dixon
Keyword(s):  
Income Tax ◽  
Oil And Gas ◽  
Investment Decision ◽  
Oil And Gas Industry ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Gas Industry ◽  
Resource Rent ◽  
Goods And Services ◽  
Petroleum Resource

Understanding the tax implications and structuring options of a transaction is critical when assessing and comparing new opportunities. When undertaking any transaction involving Australian oil and gas assets, the applicable taxation regime should be carefully explored and understood. From an Australian perspective, taxes such as corporate income tax, petroleum resource rent tax, capital gains tax, and goods and services tax have significant potential to influence the investment decision. This presentation will focus on the tax implications applicable to the acquisition and disposal of Australian oil and gas assets, providing valuable insights for both Australian companies and inbound investors.

THE IMPACT OF TAXATION LEGISLATION DEVELOPMENTS ON NON- RESIDENTS INVESTING IN AUSTRALIAN PETROLEUM PROJECTS

1989 ◽  
Vol 29 (1) ◽  
pp. 63
Author(s):  
Colin G. Thomas ◽  
Catherine A. Hayne
Keyword(s):  
Foreign Investment ◽  
Capital Gains ◽  
Capital Gains Tax ◽  
Financial Returns ◽  
Resource Rent ◽  
Australian Capital ◽  
Petroleum Resource ◽  
The Law ◽  
The Impact ◽  
Proper Consideration

Australian legislation has recently undergone further developments which affect non- residents investing in Australian petroleum projects. The comments in this paper reflect our understanding of the law at November 1988.These legislative developments have occurred in foreign investment rules and primary tax areas such as the thin capitalisation and debt creation rules for nonresident investors, Australian capital gains tax including the new involuntary roll- over provisions, the Australian dividend imputation system, and secondary taxes such as state royalties and excises and petroleum resource rent tax.The purpose of this paper is to analyse some of the recent legislative developments from the viewpoint of a non- resident investing in Australian petroleum projects. Changes in most cases are incorporated in complex legislation, and full and proper consideration of the changes is warranted for taxpayers both to comply with the law and maximise shareholders' financial returns.

Petroleum Resource Rent Tax: an update on recent developments

2012 ◽  
Vol 52 (2) ◽  
pp. 654
Author(s):  
Ian Crisp
Keyword(s):  
Oil And Gas ◽  
Due Diligence ◽  
Resource Rent ◽  
North West ◽  
The Past ◽  
The North ◽  
Petroleum Resource ◽  
Recent Developments ◽  
Key Issues ◽  
Oil And Gas Companies

Although the Petroleum Resource Rent Tax (PRRT) has been operating for longer than 20 years, the past few years have seen a significant amount of activity on this front: The announcement by the Australian government, on 2 July 2010, to expand the existing PRRTto include onshore oil and gas projects, including coal seam gas projects and the North West Shelf Project. The release of three ATO draft taxation rulings in 2010 about the pre-conditions for the deductibility of project expenditure, excluded expenditure (including indirect administration expenses) and the treatment of expenditure paid under ’sub-contractor’ arrangements. The courts’ decisions about the treatment of contract payments and the application of the PRRT taxing point. This extended abstract explores these developments as they apply to existing and new PRRT taxpayers, and identify the key issues that oil and gas companies will need to be aware of as they continue or commence compliance with the PRRT. This extended abstract also explores the impacts of these developments on transaction structuring, due diligence, financial modelling and fiscal certainty in the broader context of asset portfolios.

THE IMPACT OF THE CAPITAL GAINS TAX ON BOND YIELDS

1973 ◽  
Vol 26 (4) ◽  
pp. 575-583
Author(s):  
JOHN S. McCALLUM
Keyword(s):  
Capital Gains ◽  
Capital Gains Tax ◽  
Bond Yields ◽  
The Impact

Capital Gains Taxes and Stock Return Volatility

2013 ◽  
Vol 35 (2) ◽  
pp. 1-31 ◽  
Author(s):  
Zhonglan Dai ◽  
Douglas A. Shackelford ◽  
Harold H. Zhang
Keyword(s):  
Stock Returns ◽  
Stock Return ◽  
Cash Flows ◽  
Capital Gains ◽  
Return Volatility ◽  
Capital Gains Tax ◽  
Tax Rate ◽  
Stock Return Volatility ◽  
Capital Gains Taxes ◽  
The Impact

ABSTRACT This paper presents an empirical investigation of the impact of capital gains taxes on stock return volatility. We predict that the more stock returns are subject to capital gains taxation, the greater the increase in return volatility following a capital gains tax rate cut due to reduced risk-sharing in firms' cash flows between shareholders and the government. Consistent with this prediction, we find larger increases in the return volatility for more appreciated stocks than for less appreciated stocks and for non-dividend-paying stocks than for dividend-paying stocks after both 1978 and 1997 capital gains tax rate reductions. The findings imply that capital gains taxes convey a heretofore overlooked benefit of lower stock return volatility.

GREENHOUSE GAS ISSUES—ONE FOR THE AUSTRALIAN TAXATION OFFICE?

2005 ◽  
Vol 45 (1) ◽  
pp. 623
Author(s):  
J.H. Murray ◽  
E.A. Burns
Keyword(s):  
Carbon Dioxide ◽  
Greenhouse Gas ◽  
Carbon Dioxide Emissions ◽  
Joint Venture ◽  
Oil And Gas ◽  
Petroleum Industry ◽  
Development Project ◽  
Resource Rent ◽  
Greenhouse Emissions ◽  
Tax Relief

In the 21st century we are constantly bombarded with issues on the need to do more to protect the environment and deal with greenhouse gas issues. The petroleum industry world-wide has come under fire for the emissions produced as a by-product of the petroleum refining industry and all primary producers and refiners must develop strategies to reduce atmospheric carbon dioxide emissions. While it is probably fair to say Australia’s appetite for production and consumption of natural gas or LNG is much more environmentally friendly than the days of fossil fuel sources such as coal, there is still a long way to go to minimise emissions in the industry.Global oil and gas companies operating in Australia are leading the way to develop ways to reduce greenhouse emissions. Two examples are Gorgon joint venture plans for carbon dioxide sequestration for its gas development project and perhaps BHP Billiton’s comments that it sees potential for similar sequestration into coal seams onshore Australia in Queensland, South Australia or New South Wales.The costs of projects to re-use or re-inject or sequestrate greenhouse gases are likely to be significant. But are these operating costs of the taxpaying entities in question and would they qualify for tax relief for income tax or petroleum resource rent tax purposes? This paper looks at some of the projects now underway in Australia to reduce greenhouse emissions in the petroleum sector and assesses whether the type of costs likely to be incurred in such projects might qualify for tax relief under existing legislation.

Getting the message across—taxation contribution of the petroleum industry in Australia

2015 ◽  
Vol 55 (2) ◽  
pp. 432
Author(s):  
Carlo Franchina ◽  
Rod Henderson ◽  
Praneel Nand
Keyword(s):  
Common Ground ◽  
Oil And Gas ◽  
Petroleum Industry ◽  
Oecd Country ◽  
Life Cycles ◽  
Income Taxes ◽  
Resource Rent ◽  
Petroleum Resource ◽  
The Common ◽  
Oil And Gas Companies

With the global move towards tax transparency reporting measures, resource companies face challenges in ensuring that reporting captures the full extent of revenues contributed by resource companies and also correctly reports the project and profitability life cycles of resource companies. This extended abstract focuses on the global tax transparency debate and highlights the challenges for large Australian and global oil and gas businesses in demonstrating their payment of their fair share of tax and contributing to the communities in which they operate. Issues to be covered include: A summary of the revenue contribution of oil and gas companies in Australia through the layers of taxation, such as state royalties, the Petroleum Resource Rent Tax (PRRT) and corporate income taxes. Highlighting the types and rates of taxes paid by Australian oil and gas companies compared to other selected countries. A comparison of the concessions granted to Australian oil and gas companies to other countries. A historical summary of taxes paid by Australian oil and gas companies. A summary of existing and developing transparency reporting, such as the Australian Taxation Office (ATO) reporting of taxpayers with revenues more than A$100 million, the Extractive Industries Transparency Initiative, Dodd Frank rules, OECD country-by-country reporting, and BEPS developments. Recommendations to get the message across; that is, what should be the common ground on reporting the actual overall global tax liability including income tax, resource taxes, employment taxes and indirect taxes.

Contemporary fiscal issues impacting M&A in the oil and gas sector

2012 ◽  
Vol 52 (1) ◽  
pp. 149
Author(s):  
Kenneth Wee
Keyword(s):  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Regular Feature ◽  
Gas Industry ◽  
Resource Rent ◽  
Petroleum Resource ◽  
Recent Developments ◽  
Australian Economy ◽  
To Come ◽  
Oil And Gas Sector

Ongoing growth in deal activity in the oil and gas industry is one of the critical forces underpinning the sustained robustness of the Australian economy. Australian oil and gas assets continue to attract significant international interest and are actively pursued by global and domestic investors alike. On the supply side, exploration players are seeking the necessary funding and technical support to commercialise prospective oil and gas discoveries, while on the demand side, major established oil and gas companies are seeking to acquire viable targets as a means of rapidly replenishing their reserves. Consequently, merger and acquisition (M&A) deals and asset trades have become a regular feature of the corporate oil and gas scene in Australia. In time to come, a wave of industry consolidation is likely to emerge. This paper discusses key fiscal aspects of M&A transactions, as affected by recent developments in the Australian taxation landscape, and their impact on the overall economics of, and extracting value from, an investment in the oil and gas sector, including: the taxation of farm-in/farm-out arrangements, asset swaps and carry arrangements; structuring the deal consideration for fiscal efficiency; takeover and acquisition vehicle structures; the M&A issues associated with the extension of the Petroleum Resource Rent Tax (PRRT) to the onshore oil and gas industry; consideration associated with capital management, capital structure and financing trends for the industry; exit and repatriation routes—do all roads lead to tax?; managing transaction costs; and, managing tax risks in M&A deals.

The petroleum resource rent tax (PRRT) and the economics of an oil and gas project

2014 ◽  
Vol 54 (2) ◽  
pp. 515
Author(s):  
Carlo Franchina ◽  
Ben Opie
Keyword(s):  
Oil And Gas ◽  
Due Diligence ◽  
Critical Importance ◽  
Resource Rent ◽  
Contract Negotiation ◽  
Petroleum Resource ◽  
Key Drivers

When thinking about the key drivers of project value, the PRRT profile of a petroleum project may not be top of mind for non-tax teams. As a 40% tax on the upstream activities of a petroleum project, however, the PRRT can significantly impact on project NPV and non-tax teams can play an important role in optimising the PRRT profile of a project. For finance and legal teams, this may be as part of the due diligence, modelling, and contract negotiation phase of acquiring or disposing of an interest in a project. Operational and technical teams can play an important role in helping tax teams to understand a project so that they can apply tax technical concepts; for example, in determining the characterisation of expenditure. Properly substantiating PRRT expenditure is also of critical importance; finance, IT, commercial, and operational teams should be involved in developing systems that capture the information tax teams require to be able to quantify and evidence PRRT deductions. This extended abstract focuses on the practical ways in which non-tax teams can help optimise the PRRT profile and, in turn, the NPV of a petroleum project.

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