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HMRC internal manual

Oil Taxation Manual

PRT: non-field expenditure - exploration and appraisal expenditure: searching and ascertaining


Searching and ascertaining (or exploration and appraisal) will cover

  • the cost of shooting or purchasing seismic (in contrast to the CT provisions, see OT26045, there is no distinction between seismic that is directly commissioned or purchased)
  • the cost of interpreting seismic data
  • drilling exploration wells
  • further evaluation of the geological prospects
  • drilling of wells to ascertain the extent of the reservoir, testing flow rates etc.

Conversely, it will not include

  • production feasibility studies
  • preliminary engineering and design work studies
  • work done on evaluating another company’s prospects before buying its share capital or seeking to ‘farm in’ (see OT18320)
  • drilling of future production slots under the guise of appraisal wells
  • economic studies.

Both these lists are intended as a guide and not to be exhaustive.