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.

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.

Australian oil and gas exploration: the dawn of a new fiscal regime?

2014 ◽  
Vol 54 (2) ◽  
pp. 529
Author(s):  
Kenneth Wee ◽  
Janelle O'Hare
Keyword(s):  
Oil And Gas ◽  
Federal Budget ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Oil And Gas Exploration ◽  
Narrow View ◽  
Analytical Work ◽  
Recent Developments ◽  
Fiscal Regime ◽  
Oil And Gas Sector

The ever-evolving Australian tax landscape has brought particular attention to the scope of exploration activities in the oil and gas industry in recent times. While recent developments have attempted to shed light on the interpretation of œexploration expenditure, the narrow view adopted has raised more questions than answers, which may significantly impact the after-tax economics of projects in the oil and gas industry. Examples include: the recent AAT decision in the ZZGN case and the commissioner’s views set out in the draft taxation ruling TR 2013/D4 on the scope of deductible exploration expenditure in the PRRT context; and, the then Labor-led federal government’s proposed changes in the 2013–14 federal budget to limit an upfront deduction on œgenuine exploration activities for income tax purposes, which would have a far-reaching impact. Broadly, the recent reforms seek to limit the application of the exploration expenditure deductibility rules to the technical analytical work undertaken to evaluate/appraise the resource and expenditure incurred in direct relationship with said technical work. This presents various tax technical, commercial and practical issues that signal a new dawn in the approach to exploration expenditure for participants in the oil and gas industry. This extended abstract analyses the recent reforms and their impact on the oil and gas sector, provides an outlook of the new direction of potential fiscal change, and assesses what this might mean for the Australian oil and gas industry.

Evolution of the Australian fiscal landscape and its impact on oil and gas investments in Australia

2013 ◽  
Vol 53 (2) ◽  
pp. 445
Author(s):  
Harold Payne ◽  
Janelle Manton
Keyword(s):  
Oil And Gas ◽  
Transfer Pricing ◽  
Oil And Gas Industry ◽  
Tax Reforms ◽  
Gas Industry ◽  
Resource Rent ◽  
Tax Rate ◽  
Global Trends ◽  
Definition Of ◽  
Oil And Gas Sector

The oil and gas industry is among the most regulated and highly taxed sectors of the Australian economy. In recent times, the industry has been confronted with ongoing tax reforms that significantly impact the after-tax economics of projects. Examples include the introduction of the carbon pricing mechanism, the extension of the Petroleum Resource Rent Tax (PRRT) to the onshore oil and gas sector, the decision in the Esso case impacting on PRRT taxpayers, amendments to R&D tax incentives and modifications to the taxation system affecting mobile employees. Although the Business Tax Working Group recently did not make any recommendations to broaden the tax base to fund a reduction in the company tax rate, the desire to undertake further reforms that may impact the sector remains. The year ahead will see implementation of further transfer pricing reforms, ongoing consultation and review regarding the definition of exploration expenditure, and increasing focus on corporate international tax reform in line with global trends. Any reform has the potential to have a material impact on the capital- and exploration-intensive oil and gas industry, which also relies heavily on capital funding from multinational investors. This extended abstract analyses the recent reforms and their impact on the oil and gas sector, provides an outlook of other relevant areas of potential fiscal change, and assesses what this might mean for the Australian oil and gas industry.

What Does Rent Give to Federal Budget (on the Russia's Budget Dependence upon "Oil Dollars")

2004 ◽  
pp. 51-69 ◽  
Author(s):  
E. Sharipova ◽  
I. Tcherkashin
Keyword(s):  
Oil And Gas ◽  
Strong Dependence ◽  
Oil Prices ◽  
Federal Budget ◽  
Oil And Gas Industry ◽  
Gas Industry ◽  
Resource Rent ◽  
Tax Legislation ◽  
Russian Economy ◽  
The Government

Federal tax revenues from the main sectors of the Russian economy after the 1998 crisis are examined in the article. Authors present the structure of revenues from these sectors by main taxes for 1999-2003 and prospects for 2004. Emphasis is given to an increasing dependence of budget on revenues from oil and gas industries. The share of proceeds from these sectors has reached 1/3 of total federal revenues. To explain this fact world oil prices dynamics and changes in tax legislation in Russia are considered. Empirical results show strong dependence of budget revenues on oil prices. The analysis of changes in tax legislation in oil and gas industry shows that the government has managed to redistribute resource rent in favor of the state.

Trends and Prospects of Development of the Oil and Gas Sector in the Context of Digitalization

2020 ◽  
Vol 26 (1) ◽  
pp. 35-45 ◽  
Author(s):  
A. G. Kazanin
Keyword(s):  
Oil And Gas ◽  
Digital Technologies ◽  
Oil And Gas Industry ◽  
Global Market ◽  
The Arctic ◽  
Business And Society ◽  
Gas Industry ◽  
Exploration And Production ◽  
Oil And Gas Sector

The modern oil and gas industry is heavily dependent on the processes and trends driven by the accelerating digitalization of the economy. Thus, the digitalization of the oil and gas sector has become Russia’s top priority, which involves a technological and structural transformation of all production processes and stages.Aim. The presented study aims to identify the major trends and prospects of development of the Russian oil and gas sector in the context of its digitalization and formation of the digital economy.Tasks. The authors analyze the major trends in the development of the oil and gas industry at a global scale and in Russia with allowance for the prospects of accelerated exploration of the Arctic; determine the best practices of implementation of digital technologies by oil and gas companies as well as the prospects and obstacles for the subsequent transfer of digital technologies to the Russian oil and gas industry.Methods. This study uses general scientific methods, such as analysis, synthesis, and scientific generalization.Results. Arctic hydrocarbons will become increasingly important to Russia in the long term, and their exploration and production will require the implementation of innovative technologies. Priority directions for the development of many oil and gas producers will include active application of digital technologies as a whole (different types of robots that could replace people in performing complex procedures), processing and analysis of big data using artificial intelligence to optimize processes, particularly in the field of exploration and production, processing and transportation. Digitalization of the oil and gas sector is a powerful factor in the improvement of the efficiency of the Russian economy. However, Russian companies are notably lagging behind in this field of innovative development and there are problems and high risks that need to be overcome to realize its potential for business and society.Conclusions. Given the strategic importance of the oil and gas industry for Russia, its sustainable development and national security, it is recommendable to focus on the development and implementation of digital technologies. This is crucial for the digitalization of long-term projection and strategic planning, assessment of the role and place of Russia and its largest energy companies in the global market with allowance for a maximum number of different internal and external factors.

scholarly journals The Oil and Gas ROFR: Understanding Current ROFR Issues from the Point of View of the Transactional Lawyer, the Litigator, and In-House Counsel

2017 ◽  
Author(s):  
Donald G. MacDiarmid ◽  
Sean J. Korney ◽  
Melanie Teetaert ◽  
Julie J.M. Taylor ◽  
Robert Martz ◽  
...  
Keyword(s):  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Point Of View ◽  
Economic Consequences ◽  
Complex Nature ◽  
Gas Industry ◽  
Industry Standard ◽  
The Law ◽  
To Come ◽  
Corporate Lawyers

Rights of first refusal and other preferential or pre-emptive rights (together, ROFRs, and individually a ROFR) routinely find their way into oil and gas industry agreements. Disputes often arise because of the complex nature and significant economic consequences of ROFRs. In recent years, a number of reported cases, either relating directly to ROFRs or more generally relating to contractual interpretation, have clarified (or at times muddied) the waters surrounding the use, application, and interpretation of ROFRs. However, most ROFR disputes never result in a reported decision because the parties typically negotiate solutions long before trial.The authors consider current trends involving ROFRs in oil and gas agreements, and how they believe the law and legal practice surrounding ROFRs might continue to evolve in the years to come. The authors do not attempt to rehash the fundamentals of the law surrounding ROFRs; instead, they focus on how the courts have dealt with ROFRs in recent cases as well as how corporate lawyers and in-house counsel grapple with ROFRs day-today. The authors utilize the ROFR provisions found in industry standard contracts to analyze outstanding areas of uncertainty as well as what lawyers should contemplate prior to including a ROFR in an agreement. Additionally, the article examines the implications of recent rulings on the duty of good faith that may affect ROFRs. Finally, the article considers selected subjects of topical interest, including ROFRs in the context of busted butterfly transactions, insolvency proceedings, and package deals.

Interpreter Sam

2019 ◽  
Vol 38 (12) ◽  
pp. 980-980
Keyword(s):  
Human Resources ◽  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Graduate Degree ◽  
Career Goal ◽  
Gas Industry ◽  
Personal Learning ◽  
To Come ◽  
A Company ◽  
Personnel Department

Sam traveled back about two-thirds of a lifetime to see a young man, the proud owner of a newly awarded graduate degree and married for only two weeks, walking into the lobby of the building where he would start his career as a geophysicist in the oil and gas industry. He carried a personalized leather briefcase, a gift from his parents which was very fashionable in those days; he doesn't remember any details of its contents. By his own estimate he was confident, but not too confident, and undoubtedly was much more nervous and apprehensive than he realized at the time. After only a few years and still on a very steep segment of his personal learning curve, he chose to take a position with a different company, necessitating relocation of his family to another state. At his new company a representative of the Personnel department (the language hadn't evolved to Human Resources yet) asked him, “What is your primary career goal?” Instinctively and without hesitation he replied, “I want to be the best geophysicist you have.” He couldn't have imagined how often the substance of his response would motivate and guide him in years to come, nor could he have known at the time that there is no such person as the “best geophysicist” in a company (see Interpreter Sam in the October 2008 issue of TLE). Certainly there is an “only geophysicist” in some companies, but …

scholarly journals Strategic perspectives of the oil and gas sector industrial development

2021 ◽  
Vol 14 (4) ◽  
pp. 369-374
Author(s):  
O. I. Kalinskiy ◽  
M. A. Afonasiev
Keyword(s):  
Carbon Capture ◽  
Industrial Development ◽  
Oil And Gas ◽  
Storage System ◽  
Carbon Capture And Storage ◽  
Energy Transition ◽  
Oil And Gas Industry ◽  
Low Carbon ◽  
Gas Industry ◽  
Oil And Gas Sector

The authors study oil and gas industry, its condition and perspective trends of industrial development. One of them involves applying low carbon and low cost technologies. The authors introduce new strategic imperatives in oil and gas sector to perform energy transition. They study the types of categories of perspective trends of the industry’s development: scaling up the development and implementation of a carbon capture and storage system, using low carbon raw materials, making it possible to take granular measurements. The article deals with perspectives of the oil and gas industry for the current year. The perspectives are built with the consideration of the previous year’s indicators and include all the past disasters and the dynamics of their solution and the results for the society. The authors show wider implementation of drones used for abnormal emissions of hydrogen sulfide to carry out distant monitoring, observations, inspections and preventive maintenance, change tracking, methane management, emergency response and material processing. The article describes precision drilling which reduces the risk of accidents, oil spills, fires and increases rate of penetration. The authors present microwave hydraulic fracturing which can become the next significant achievement in the perspective development of the industry.

scholarly journals A Perspective on Merger Review and Other Current Topics under the Competition Act

1991 ◽  
Vol 29 (1) ◽  
pp. 171
Author(s):  
Calvin S. Goldman
Keyword(s):  
Free Trade Agreement ◽  
Review Process ◽  
Oil And Gas ◽  
Trade Agreement ◽  
Oil And Gas Industry ◽  
Case Law ◽  
Gas Industry ◽  
Recent Developments ◽  
Potential Impact ◽  
Broad Overview

In this article, the author examines recent developments under the federal Competition Act and its potential impact on mergers in the oil and gas industry. The author provides a broad overview of the merger review process and highlights recent Canadian case law on mergers. Implications of the Canada-U.S. Free Trade Agreement on the administration of competition law in Canada are also canvassed.

scholarly journals Iraqi Kurdistan Oil and Gas Sector: Iraqi and International Dimensions

2020 ◽  
pp. 58-67
Author(s):  
Qadir Aso Araz
Keyword(s):  
Oil And Gas ◽  
Oil And Gas Industry ◽  
Regional Government ◽  
Legal Basis ◽  
Kurdistan Region ◽  
Gas Industry ◽  
Iraqi Kurdistan ◽  
International Aspects ◽  
Oil And Gas Sector

The article deals with the problem of the influence of the Iraqi Kurdistan oil and gas industry on the relations of the Kurdish autonomy with the central authority of Iraq. The international aspects of extraction and transportation of hydrocarbons from the territory of the Kurdistan Region are also analyzed. The legal basis for the functioning of the oil and gas complex in the region, the main differences between Erbil and Baghdad regarding the powers of the Kurdish regional government in the field of exploitation of natural resources of the autonomy is represented. It has been established that the independent activity of the Iraqi Kurdistan authorities in the development of the oil and gas industry in its territory, the wide involvement of foreign investment provided autonomy a significant source of income, which became the financial backing of Erbil in his political disputes with Baghdad. At the same time, in the question of the transportation of hydrocarbon, the landlocked Iraqi Kurdistan was critically dependent on Turkey, which greatly limits its range of options in its relations with Ankara. Excessive dependence of the Iraqi Kurdistan economy on hydrocarbon exports is one of the strategic challenges for Kurdish autonomy, but significant positive developments in this area are possible only in the long-term perspective. Keywords: Iraq, Iraqi Kurdistan, Kurdish autonomy, Turkey, oil and gas industry.

Sign in / Sign up

Export Citation Format

Share Document