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HMRC internal manual

Oil Taxation Manual

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HM Revenue & Customs
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Capital gains: valuation of oil assets including shares: third party information and information sources

Where appropriate, assumptions and information used in arriving at a submitted valuation should be sourced from or supported by third party information. Whilst this may not always be possible, in cases where the value is being scrutinised, HMRC will need to be satisfied that the submitted facts, figures and assumptions are accurate and robust.

In doing this HMRC will consider the third party information available.

Established sources of information include the following:

  • Wood MacKenzie North Sea Service to which LB (Oil & Gas) subscribes. Wood MacKenzie also covers other oil provinces;
  • The Oil & Gas Directorate at the DECC (Department of Energy and Climate Change), including published DECC material on the North Sea;
  • The US Government Energy Information Administration, via its website () has a significant amount of information in the form of country overviews, and often contains field and area specific information;
  • The Worldwide Web: host country and oil company websites can include similar overviews, which may also be useful.

The data being to be considered is not limited to that obviously in the public domain. Unless there is a contested bid (which would not happen under the willing buyer/willing seller scenario) the assumption is that acquisitions take place after a visit to the vendor’s data room. The buyer would have all, or almost all, the information available to the vendor.

Wood MacKenzie values will be considered in this context. Their field reports are useful, but they may not incorporate all the relevant data available at the time and they may not displace contemporary evidence. Nevertheless, what they say on reserves can be helpful in arriving at a decision as to whether a production profile is acceptable and they can provide useful estimates of opex and capex. They are more authoritative on acceptable discount rates, foreign exchange rates and the gas/oil prices