TAX BREAK MAY ALLOW DEVELOPMENT OF MARGINAL N. SEA FIELD

British independent Lasmo North Sea plc has made a tax breakthrough in the treatment of a marginal oil field in the U.K. North Sea, Lasmo won government approval for a royalty repayment deal that will allow development of Columba oil field in Blocks 3/8a, 3/2 and 3/7a. The deal allows repayment of royalties from accumulated royalties paid by members of the Columba group from any source of production off the U.K.

July 29, 1991

2 min read

British independent Lasmo North Sea plc has made a tax breakthrough in the treatment of a marginal oil field in the U.K. North Sea,

Lasmo won government approval for a royalty repayment deal that will allow development of Columba oil field in Blocks 3/8a, 3/2 and 3/7a.

The deal allows repayment of royalties from accumulated royalties paid by members of the Columba group from any source of production off the U.K.

It is the first time an operator has persuaded the Department of Energy to exercise its discretionary power to allow royalty repayment for a field that otherwise might not be developed.

Columba offsets to the southwest the Chevron U.K. Ltd. group's Ninian oil field and for taxation purposes is treated as part of the Ninian area.

This means the tax allowances and reliefs against the cost of development, normally available to new fields, have been used by Ninian.

Lasmo said the royalty repayment agreement provides the incentive to start predevelopment studies, which are to be complete in 1992, This could lead to an application for a development permit.

The level of royalty repayments will be linked to Columba's production performance. Repayments will be free of any further tax liabilities.

Members of the Columba group are Lasmo, Ranger Oil (U.K.) Ltd., Oryx U.K. Energy Co., Deminex U.K. Oil & Gas Ltd., Enterprise Petroleum Ltd., Chevron, Conoco (U.K.) Ltd., Murphy Petroleum Ltd., and Ocean Exploration Co. Ltd.