Range has highlighted the newly proposed budget incentives for oil and gas companies introduced by the Minister of Finance and Economy of Trinidad and Tobago in the 2014 Budget Statement to Parliament on 9 September. These newly proposed incentives especially reward companies with accelerated exploration and development programmes and are expected to have a positive impact on Range’s long term production growth plan.

• After a long period of production decline in Trinidad, there has been a substantial expansion of E&P activity in Trinidad in recent years and this is expected to continue as the government improves the fiscal terms available to companies investing in upstream oil and gas activities.
• In particular, the government now plans to offer a 100% capital allowance on exploration expenditure in 2014-2017 (on both tangible and intangible assets) compared to the current regime which permits an initial allowance of 20% of the cost of tangible assets and only 10% on intangible assets.
• From 2018 onwards, the suggested allowance will be 50% of both tangible and intangible costs, declining to 30% in year two and 20% in year three. This is significant improvement on the current terms which offer a static annual allowance of 20% on tangible and intangible costs.
• The current allowances for development expenditure are the same as for exploration. However, the government proposes to offer enhanced capital allowances of 50% of cost in year one, falling to 30% in year two and 20% in year three in order to stimulate longer term drilling activity.
• On workovers and qualifying sidetrack wells, the government proposes to offer a 100% allowance on all tangible and intangible costs in year one.

This compares to a current initial allowance of only 20% on tangible capital costs. It should be noted that the government already has a 100% allowance on intangible costs.

Range is still awaiting completion of the sale of its Texas assets for which the company has received a $1.0m non-refundable deposit and has extended the deadline for the completion of the deal. The company will update the market when the balance of the funds has been received. Meanwhile, the news from Trinidad is unambiguously positive and Range is in a strong position to benefit from the improving fiscal environment over the next three years.