U.K. TAX REVAMP COULD SEND MONEY, RIGS FLEEING TO GULF OF MEXICO

Changes in the U.K.'s petroleum revenue tax may divert exploration funds to the U.S. Gulf of Mexico.

And movement of rigs from the U.K. North Sea into the gulf could halt a climb in gulf rig rates.

That's the assessment of Robert Moses, president of British-Borneo Exploration Inc., Houston.

If proposed changes in the PRT (OGJ, Mar. 29, p. 33) are implemented, wildcats and appraisal wells off the U.K. could cost three or four times as much as under the current tax regime. Operators may decide to take some of that money to the Gulf of Mexico, say British-Borneo Exploration executives.

Parent company British-Borneo Petroleum Syndicate plc, London, announced late last month that British-Borneo Exploration will operate an exploration group to pursue farmin and other opportunities in the gulf, mainly off Texas and Louisiana.

Other members of the group are American Cometra Inc., a subsidiary of Belgium's Electrafina SA, 33%, and Ranger Oil Co., a subsidiary of Ranger Oil Ltd., Calgary, 33%. As operator, British-Borneo Exploration will hold a 34% share.

The combine plans to pursue three or four projects a year at first, Moses said. Even though more money may be available if proposed PRT changes are implemented. "We'll still be driven by prospect quality, not the availability of funds," Moses said.

David A. Pustka, vice-president of exploration ventures, said the new group will focus on taking farmouts. "But we'll be watching (Gulf of Mexico) sale, too," he said. The company bid in last month's OCS Sale 142 but was unsuccessful.

Establishing an operating capability in the gulf will be the key to the success of the group, Moses said. "We don't want to settle for the 'promotes'."

The prospect for continued strength in gas prices is encouraging, Moses said.

Technology will help boost success ratios and cut development costs. But William Bruha, operations manager of the new combine, said operating experience is proving to be just as important. Much experience has been lost as the industry slashed payrolls in recent years. Now, operating experience can often be as much of a competitive advantage as technology, Bruha said.

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