A 100% allowance for expenditure incurred
in respect of abandoning a field.
Appraisal
expenditure
Costs incurred in survey, exploitation
and appraisal of licence areas not yet under development or in production.
Commercial
field
Field
judged to be capable of producing sufficient net income to be
worth developing.
Conveying & Treating (C&T)
Services provided by a field to other fields in vicinity.
Cross Field
Allowance (CFA)
An element (up to 10%) of immediate
relief for qualifying field development costs where a participator on a
new taxable development has, or expects to have, PRT
profits in another taxable field.
Development
expenditure
All costs including financing costs,
E&A
expenditures incurred in bringing a field to commercial production and is defined as tangible assets.
Discount
rate
Used to convert future income / expenditure
to its present day value.
Exploration
expenditure
All costs, including premium payments,
associated with acquisition of new acreage, drilling of exploratory wells
and other costs incurred in evaluating commercial viability of geological entities.
Marginal
Field
A field that may not produce enough net income to make
it worth developing at a given time; should technical or economic
conditions change, such a field may become commercial.
Mineral Extraction
Allowance (MEA)
Expenditure on mineral exploration
and access and certain costs in acquiring mineral assets may
be relieved by way of MEA.
Net present value (NPV)
Discounted value of future cash flow.
Oil
Allowance
A gross production relief that reduces
effective PRT
rate, but cannot be used to create a tax loss.
Applies to UK oil production and associated profits of licensees.
Only to fields
where Annex B consent was first given before 18 March 1993.
Research
expenditure allowance (R&D)
Relief makes allowable against a participator's
liability for any field, R&D costs that do not became allowable
in a particular field within three years of being incurred.
Revenue
expenses
General and administrative (G&A)
costs of a revenue nature and intangible development
drilling costs are usually deducted
in full as incurred.
Royalty
payments
As part of some early UKCSlicence round conditions there was an obligation to
pay a royalty on "value of the petroleum" which is deductible in computing PRT and CT .
Scientific research allowances
(SRA)
Whether of a capital nature or otherwise
(costs of exploration work) qualifies for full write-off as incurred.
Spot
market
International market in which oil or
oil products are traded for immediate delivery at current (spot)
price.
Tariff
Payments made by fields to other fields that provide transportation
and / or processing of production.
Tariff Receipt
Allowance (TRA)
Participators in owner field share an allowance equivalent to 250,000 tonnes of
throughput per chargeable period for each taxable user field.
Value Added Tax
(VAT)
Introduced at 8% on UK domestic fuel
and power in April 1994.
