LEGAL AND TAXATION IMPLICATIONS FOR THE ACQUISITION AND DISPOSAL OF OFFSHORE PETROLEUM PRODUCTION AND EXPLORATION TENEMENTS—A PRACTICAL VIEW AND UPDATE

1986 ◽  
Vol 26 (1) ◽  
pp. 7
Author(s):  
J. Allen ◽  
M. Williamson
Keyword(s):  
Capital Gains ◽  
Capital Gains Tax ◽  
Development Activity ◽  
Resource Rent ◽  
Petroleum Production ◽  
North West ◽  
The North ◽  
Funding Mechanisms ◽  
Exploration And Development ◽  
Offshore Petroleum

The administrative aspects of petroleum mining and exploration companies have become more complex of recent years. One area where this is particularly so is in relation to the livelihood of the industry, i.e. access to tenements.While exploration and development activity onshore has hotted up in particular, offshore activity has been fervent but limited largely to bringing into production fields on the North West Shelf, at Jabiru and new areas in Bass Strait. Generally it is held that the likelihood for discoveries of large fields will be offshore Australia rather than onshore and that present exploration activities offshore are inadequate to maintain Australia's oil self-sufficiency.Recent amendments to the Petroleum (Submerged Lands) Act, a plethora of associated Acts, and proposed new tax imposts (e.g. cash bonus bids, retention licence fees, resource rent tax, and capital gains tax) in relation to the offshore segment of the industry have added significantly to the complexities in planning the acquisition and disposal and ongoing control of tenements. Each of these is examined individually and in conjunction for the benefit of planners and executives administering tenements within their organisations.Both sides of the transaction are viewed with emphasis on their tax positions providing opportunities to control the directions and funding mechanisms for the transaction.

DEMETER HIGH RESOLUTION 3D SEISMIC SURVEY—REVITALISED DEVELOPMENT AND EXPLORATION ON THE NORTH WEST SHELF, AUSTRALIA

2006 ◽  
Vol 46 (1) ◽  
pp. 101 ◽  
Author(s):  
K.J. Bennett ◽  
M.R. Bussell
Keyword(s):  
High Resolution ◽  
Seismic Data ◽  
New Technologies ◽  
Seismic Survey ◽  
Future Application ◽  
3D Seismic ◽  
Gas Field ◽  
North West ◽  
The North ◽  
Exploration And Development

The newly acquired 3,590 km2 Demeter 3D high resolution seismic survey covers most of the North West Shelf Venture (NWSV) area; a prolific hydrocarbon province with ultimate recoverable reserves of greater than 30 Tcf gas and 1.5 billion bbls of oil and natural gas liquids. The exploration and development of this area has evolved in parallel with the advent of new technologies, maturing into the present phase of revitalised development and exploration based on the Demeter 3D.The NWSV is entering a period of growing gas market demand and infrastructure expansion, combined with a more diverse and mature supply portfolio of offshore fields. A sequence of satellite fields will require optimised development over the next 5–10 years, with a large number of wells to be drilled.The NWSV area is acknowledged to be a complex seismic environment that, until recently, was imaged by a patchwork of eight vintage (1981–98) 3D seismic surveys, each acquired with different parameters. With most of the clearly defined structural highs drilled, exploration success in recent years has been modest. This is due primarily to severe seismic multiple contamination masking the more subtle and deeper exploration prospects. The poor quality and low resolution of vintage seismic data has also impeded reservoir characterisation and sub-surface modelling. These sub-surface uncertainties, together with the large planned expenditure associated with forthcoming development, justified the need for the Demeter leading edge 3D seismic acquisition and processing techniques to underpin field development planning and reserves evaluations.The objective of the Demeter 3D survey was to re-image the NWSV area with a single acquisition and processing sequence to reduce multiple contamination and improve imaging of intra-reservoir architecture. Single source (133 nominal fold), shallow solid streamer acquisition combined with five stages of demultiple and detailed velocity analysis are considered key components of Demeter.The final Demeter volumes were delivered early 2005 and already some benefits of the higher resolution data have been realised, exemplified in the following:Successful drilling of development wells on the Wanaea, Lambert and Hermes oil fields and identification of further opportunities on Wanaea-Cossack and Lambert- Hermes;Dramatic improvements in seismic data quality observed at the giant Perseus gas field helping define seven development well locations;Considerably improved definition of fluvial channel architecture in the south of the Goodwyn gas field allowing for improved well placement and understanding of reservoir distribution;Identification of new exploration prospects and reevaluation of the existing prospect portfolio. Although the Demeter data set has given significant bandwidth needed for this revitalised phase of exploration and development, there remain areas that still suffer from poor seismic imaging, providing challenges for the future application of new technologies.

COMMONWEALTH PERSPECTIVE ON PETROLEUM TAXATION

1999 ◽  
Vol 39 (2) ◽  
pp. 126
Author(s):  
B. Layer
Keyword(s):  
Risk Premium ◽  
Petroleum Industry ◽  
Forward Rate ◽  
Gas Transfer ◽  
Development Activity ◽  
Resource Rent ◽  
Forward Rates ◽  
North West ◽  
Percentage Points

In 1997 the petroleum industry sought modifications to the petroleum resource rent tax (PRRT) regime which applies to all Commonwealth offshore areas except the North West Shelf Project area. Industry argued that the PRRT impeded deepwater exploration and development activity and the exploitation of large stranded gas deposits suitable for conversion to liquids such as LNG. Industry suggested that a more appropriate risk/reward balance in the tax structure could be achieved by providing a volume based PRRT exemption for projects located in water depth greater than 400 m and by increasing the uplift rates for unrealised losses. It was proposed that the risk premium for the general (development) expenditure carry forward rate be increased by five percentage points to the long term bond rate (LTRR) plus 10 percentage points. Another industry recommendation was that exploration expenditures incurred more than five years before the issue of a production license (PL), which currently attract the lower GDP factor rate (the five year rule), be uplifted at the long-term bond rate for the period prior to the five year mark and then rolled forward at LTBR plus 15 percentage points. In addition, industry asked that the reference date for the five year rule should be based on the application date for a PL and not the issue date. For integrated gas to liquid projects, industry requested clarification of the basis for valuing feedstock gas for determining gas liability.In response, the Commonwealth decided to adopt a gas transfer price (GTP) methodology based on a combination of established cost plus and net back formulas to be applied to the up and downstream stages of the project respectively. The difference in the price outcome of the two methods, the residual price, is split 50:50 to obtain the GTP. Details of how the residual price method will be applied are currently being finalised with a view to enacting legislation in 1999-2000. The Commonwealth also responded positively to the industry suggestion that the reference date of the five year rule be applied from the date of application for the PL on the proviso that the appropriate authority receives all information pertaining to a successful application. Recommended changes to the PRRT for deepwater areas and proposed increases to the carry forward rates of undeducted losses were rejected mainly on economic efficiency grounds.

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.

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.

Review of the 2008 offshore petroleum exploration release areas

2008 ◽  
Vol 48 (1) ◽  
pp. 359
Author(s):  
Marita Bradshaw
Keyword(s):  
Shallow Water ◽  
Sedimentary Basins ◽  
Water Area ◽  
Petroleum Exploration ◽  
Adjacent Area ◽  
Petroleum Potential ◽  
North West ◽  
The North ◽  
Wide Range ◽  
Offshore Petroleum

Each year the Australian Government releases new offshore opportunities for petroleum exploration. Thirty-five new exploration areas located across five of Australia’s offshore sedimentary basins are offered in the 2008 Release. All the areas are available through a work program bidding system with closing dates for bids at six and 12 months from the date of release. Acreage in the first round closes on 9 October 2008 and includes the more explored areas. The second closing round on 9 April 2009 comprises acreage located in less well explored and frontier regions. The 2008 exploration areas are in Commonwealth waters offshore of Western Australia and the Northern Territory, and in the Territory of the Ashmore and Cartier Islands adjacent area. The 2008 Release focusses on the North West Shelf, as well as offering two new exploration areas in the Vlaming Sub-basin in the offshore Perth Basin. Seven of the new release areas are located in Australia’s major hydrocarbon producing province, the Carnarvon Basin. They include a shallow water area in the western Barrow Sub-basin and another on the Rankin Platform, three areas in deeper water in the Exmouth Sub-basin and two on the deepwater Exmouth Plateau. Six areas are available for bidding in the Browse Basin and another five in the Bedout Sub-basin of the Roebuck Basin. In the Bonaparte Basin, the 15 Release areas are located in shallow water and represent a range of geological settings, including the Vulcan and Petrel sub-basins, Ashmore Platform and Londonderry High. The 2008 Offshore Petroleum Exploration Release of 35 areas in five basins covers a wide range in size, water depth and exploration maturity to provide investment opportunities suited to both small and large explorers. The Release areas are selected from nominations from industry, the States and Territory, and Geoscience Australia. The focus of the 2008 Release is on the North West Shelf where there is strong industry interest in the producing Carnarvon and Bonaparte basins and in the Browse Basin, the home of super-giant gas fields under active consideration for development. Also included in the 2008 Release is the Bedout Sub-basin, in the Roebuck Basin, located on the central North West Shelf, between the hotly contested Carnarvon and Browse basins. In addition, the Release show-cases the southern Vlaming Sub-basin, Perth Basin, where recent studies by Geoscience Australia provide a new understanding of petroleum potential (Nicholson et al, this volume).

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.

RESERVOIR GEOMETRY OF FLUVIAL DISTRIBUTARY CHANNELS—IMPLICATIONS FOR NORTHWEST SHELF, AUSTRALIA, DELTAIC SUCCESSIONS

2003 ◽  
Vol 43 (1) ◽  
pp. 325 ◽  
Author(s):  
T.H.D. Payenberg ◽  
S.C. Lang
Keyword(s):  
Detailed Knowledge ◽  
North West ◽  
Reservoir Characteristics ◽  
Delta Plain ◽  
The North ◽  
Meander Channel ◽  
Mahakam Delta ◽  
Rectilinear Channel ◽  
Distributary Channel ◽  
Exploration And Development

The exploration and development of stratigraphically trapped hydrocarbons requires detailed knowledge of the morphologies and reservoir characteristics of the stratigraphic body. Fluvial distributary channels are important exploration targets because they are typically isolated reservoirs, laterally and vertically sealed by delta plain and abandoned channel mudstone, and thus form excellent stratigraphic traps. The morphology and reservoir characteristics of fluvial distributary channels have been confused with fluvial channels in the past. Knowing the characteristics of fluvial distributary channels and their difference from fluvial channels is the key to the successful exploration and development of distributary channel reservoirs.Fluvial distributary channels, formed by mixed-load systems, are commonly rectilinear channel segments found only on the delta plain between the head of passes and the depositional mouthbars. While fluvial channel reservoirs are mainly sandstone deposits of meander pointbars or braided sheets, fluvial distributary channel reservoirs are typically elongated sandy channel sidebars attached to morphologically rectilinear channel walls. The sidebars form by both lateral and downstream accretion resulting from flow in a confined, but lowsinuosity thalweg, which may be filled with organic mud following channel abandonment. On 3D seismic data the morphology of a fluvial distributary channel is often slightly sinuous and can easily be mistaken for part of a meander channel belt.Fluvial distributary channels are usually thinner and shallower compared to their updip fluvial channel belts. Width-thickness ratios for fluvial distributary channel reservoirs are on average 50:1 (range 15:1 to 100:1), while meandering fluvial channel reservoirs have widththickness ratios typically >100:1, and braided river reservoirs show ratios of 500:1 or higher. Examples from the Mahakam Delta are used to illustrate these issues. Implications for exploration and development of deltaic deposits on the North West Shelf of Australia are discussed.

CAPITAL GAINS TAX IN THE PETROLEUM INDUSTRY

1986 ◽  
Vol 26 (1) ◽  
pp. 23
Author(s):  
S. Breckenridge
Keyword(s):  
Income Tax ◽  
Focal Point ◽  
Petroleum Industry ◽  
Capital Gains ◽  
Tax Rates ◽  
Capital Gains Tax ◽  
Resource Rent ◽  
The Government ◽  
Legal Concepts ◽  
The Cost

Eleven years after a previous abortive attempt, another Federal Labor Government has announced its intention to incorporate into the Australian fiscal scene a capital gains tax. The tax is to be levied at marginal and corporate income tax rates on 100 per cent of inflation adjusted gains realised on assets acquired on and after 20 September 1985.Whilst the Government expects its revenue yield to be low even at the end of five years of operation, the cost of protective administration and compliance to be incurred by taxpayers will be substantial.There are substantial areas of uncertainty in the capital gains tax proposals generally, and in particular as they relate to the petroleum industry. These issues, coupled with the prospect of significant legislative delay, will detract further from Australia's appeal as a focal point for essential exploration dollars.The capital gains tax proposals outlined to date deal, superficially, with basic and very tangible property. However, they do not come to grips with issues such as the potential duplication of this tax and resource rent tax, the need to protect the position of non-residents from double taxation, the basis for imposition of capital gains tax upon changes in licence and permit interest through direct or indirect transfers, to avoid bunching distortions, and to more fully provide for rollover relief.The capital gains tax proposals will exacerbate the substantial stress upon the Australian Taxation Office and, coupled with the forthcoming requirement of the Income Tax Assessment Act to accommodate the proposed resource rent tax, will only serve to highlight the fact that in reality the petroleum industry has not been a winner in this area of the tax reform process.The scope for unexpected capital gains tax exposures to arise is marked and will require a clear analysis of several long-established legal concepts to ensure that even reasonable results are obtained.

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.

Petroleum geology of the 2018 offshore acreage release areas

2018 ◽  
Vol 58 (2) ◽  
pp. 437
Author(s):  
Thomas Bernecker ◽  
George Bernardel ◽  
Claire Orlov ◽  
Nadège Rollet
Keyword(s):  
Information Management System ◽  
Source Rocks ◽  
Petroleum Exploration ◽  
Data Repository ◽  
North West ◽  
Work Program ◽  
Petroleum Systems ◽  
The North ◽  
Well Data ◽  
Offshore Petroleum

A total of 21 areas were released in 2018 for offshore petroleum exploration. They are located in the Bonaparte, Browse, Northern Carnarvon, Bight, Otway and Gippsland basins. All release areas were supported by industry nominations, indicating that interest in exploring Australia’s offshore basins remains strong, despite the significant decrease in the number of exploration wells drilled in recent years. Sixteen areas are being released under the work program bidding system with two rounds, one closing on 18 October 2018 and the other on 21 March 2019. Five areas are being released for cash bidding and include the producible La Bella gas accumulation in the Otway Basin. Prequalification for participation in the cash-bid auction closes on 4 October 2018 with the auction scheduled for 7 February 2019. Geoscience Australia continues to support industry activities by acquiring, interpreting and integrating pre-competitive datasets that are made freely available as part of the agency’s regional petroleum geological studies. The regional evaluation of the petroleum systems in the Browse Basin has been completed and work continues on assessing the distribution of Early Triassic source rocks and related petroleum occurrences across the North West Shelf. A wealth of seismic and well data, submitted under the Offshore Petroleum and Greenhouse Gas Storage Act 2006, are made available through the National Offshore Petroleum Information Management System. Additional datasets are accessible through Geoscience Australia’s data repository.

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