Wireline Issue 45 - Summer 2019

News

(L-R) OGUK market intelligence manager Ross Dornan, Chrysaor CEO Phil Kirk, BHGE European director of oilfield equipment Romain Chambault, and OGUK chief executive Deirdre Michie at the launch of the Business Outlook 2019.

Production has increased by 20 per cent over the past five years, following 14 years of decline. In addition, oil and gas produced on the UKCS continues to provide around 60 per cent of the UK’s overall demand. At the same time, new momentum is building around exploration activity, with up to 15 exploration wells expected in 2019, including several potentially high-impact prospects. However, drilling activity – key to progressing resources to production – remains at a record-low rate. New entrants are also making their mark; the largest ten E&P companies accounted for just over half of production in 2018 compared with more than two- thirds in 2008, reflecting an increasingly diverse corporate landscape. While the report finds 62 per cent of contractor companies have an improved outlook for 2019, many areas of the supply chain are still experiencing challenges as industry emerges from one of its most difficult downturns.

Forecasts also suggest that £200 billion will need to be spent by E&P companies in existing and new opportunities to realise industry’s Vision 2035 and add a generation of productive life to the basin.

Business Outlook considers

“new reality” for oil and gas

Download a copy of the Business Outlook report via the OGUK website.

OGUK's Business Outlook 2019 finds that a sustained focus on cost and efficiencies and ongoing uncertainty in commodity markets mark the “new reality” for the UK’s offshore oil and gas sector. Launched at events in Aberdeen and London on 20 March, sponsored by Deloitte and White & Case LLP respectively, the Outlook reports that continued uncertainty in commodity markets is reinforcing investor caution, with forecasts indicating a conservative outlook for prices. Against this backdrop, exploration and production companies remain focused on cost whilst striving for further business and operational improvements.

TTH, Finance Act given Royal Assent February saw Royal Assent given to the Finance Bill (now Finance Act 2019). The Act formalises new legislation on transferrable tax history (TTH) and changes to the petroleum revenue tax (PRT). TTH allows a seller to transfer a specified amount of tax history to an asset buyer at the time of an asset deal. The buyer can then carry back decommissioning costs against its

w ire lin e | S u mm e r 2 019 | 5