11th Oct 2019 10:46
(Alliance News) - Trinity Exploration & Production PLC on Friday noted proposed reforms by the government of Trinidad & Tobago in its Budget Statement to encourage investment in the energy sector.
In the statement related to oil production, the oil & gas firm noted three changes: the first being an increase in the investment tax credit from 20% to 25%, which will increase the amount of capital expenditures that can be used to offset the supplemental petroleum tax.
Other changes are in the capital allowances for tangible and intangible drilling costs. The government proposed changing the allowance profile from 50% in year one, 30% in year two and 20% in year three to a 20% straight-line basis over five years.
Finally, the government has proposed a reduction in the rate from 100% to 75% of taxable profit, meaning 75% of taxable profit for the year will be sheltered from petroleum profit tax.
The changes will become effective from the start of January 2020.
"Whilst the change to investment tax credits to offset against SPT is to be welcomed, its impact on Trinity is effectively negated by the deferral of benefits for capital allowances and PPT relief. In aggregate, the net effect of the changes on Trinity's portfolio net asset value, and expected free cash flow profile, is not expected to be material," said Executive Chair Bruce Dingwall.
"There is an industry wide call for more fundamental SPT reform to encourage greater investment in the energy sector, and we remain at the forefront of discussions which we hope will result in further significant changes in due course," Dingwall added.
Shares in Trinity Exploration & Production were down 4.8% at 9.50 pence on Friday in London.
By Dayo Laniyan; [email protected]
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