LGO Energy plc (LSE AIM: LGO) has confirmed that it has been notified by the Petroleum Company of Trinidad and Tobago Limited (Petrotrin) that overriding royalty rate reductions for the company's production at the Goudron Field in Trinidad have been approved and these reductions come in to effect from 16 March 2016 and will apply to sales made from 1 February 2016 forward.
The new royalty rates, which apply to production at oil prices below US$50/bbl, will see the royalty rate on the majority of barrels produced reduced by over 40% to rates below 10%. This will have a net revenue benefit at current oil prices and production levels of approximately 10% to Goudron E&P Limited (GEPL), LGO's wholly owned Trinidadian subsidiary which operates the Goudron Field. That impact will increase at higher production levels. GEPL is committed to increasing production from the field and will look to reinvest the savings in additional well work.
Neil Ritson, LGO's Chief Executive, commented:
"We are delighted that the mutual benefits of encouraging investment by reducing royalty rates at this time of lower oil prices have been recognised. LGO has responded by increasing the level of ongoing investment, as recently reported, and this will be good for the company, its investors and for Trinidad generally."
Adapted from a press release by Louise Mulhall
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