Ithaca clarifies the impact on the Company's near to medium term financial position further to the recent announcement made by the UK government regarding changes to fiscal regulations.
On March 23, 2011, the UK government announced that it would be increasing the rate of supplementary charge from 20% to 32% from 24 March 2011, resulting in a 62% marginal tax rate. The following important factors should be taken into account when considering the specific impact of the tax increase on the Company:
The Company's tax losses pool at the start of 2011 was approximately US $215 million. This pool, combined with the Company's predicted future capital expenditure program, indicates no taxes are likely to be payable for at least the next five years.
The Company's revenues from future field developments with approximately less than 25 million barrels of oil equivalent, such as the Athena field, will continue to benefit from the Small Field Allowance sheltering up to US $120 million of field profits from the 32% supplementary charge.
The Company has limited decommissioning liabilities, which minimizes its exposure to the announced differential tax treatment of decommissioning costs.
The Company is continuing with its development of the Athena field and the core Stella hub. A review of the Company's portfolio of existing appraisal and development opportunities will be conducted as details of the draft tax change legislation emerge.