Change in equity share: transfer of field allowance
345Introduction to sections 346 and 347
(1)Sections 346 and 347 apply if the following conditions are met.
(2)Condition A is that a company that is a licensee in a new oil field (“the transferor”) disposes of the whole or a part of its share of the equity in the new oil field (and in section 347 each of those to which a share of the equity is disposed of is referred to as “a transferee”).
(3)Condition B is that, immediately before the disposal, the transferor holds an unactivated amount of field allowance for the new oil field.
(4)Subsection (5) applies when—
(a)determining (for the purposes of this section) whether a transferor holds an unactivated amount of field allowance immediately before the disposal (“the relevant time”), and
(b)determining (for the purposes of section 346), the unactivated amount of field allowance which a transferor holds at the relevant time;
but it applies only if an amount of field allowance for the new oil field (“the relevant amount”) has, by virtue of section 344, been activated in respect of the reference period that ends because of the disposal.
(5)When making the determination, the relevant amount of the field allowance must be treated as having been activated at a time before the relevant time.
(6)In a case where a company has three or more different shares of the equity in a new oil field during a particular day, sections 346 and 347 (in particular provisions relating to the beginning or end of a day) have effect subject to the necessary modifications.
346Reduction of field allowance if equity disposed of
(1)The unactivated amount of the field allowance for the new oil field which the transferor holds immediately before the disposal is to be reduced by the following amount—
where—
F is the unactivated amount of the field allowance which the transferor holds immediately before the disposal,
E1 is the transferor’s share of the equity in the new oil field immediately before the disposal, and
E2 is the transferor’s share of the equity in the new oil field immediately after the disposal.
(2)This section has effect at the end of the day on which the disposal takes place.
347Acquisition of field allowance if equity acquired
(1)If a transferee holds a field allowance for the new oil field immediately before the disposal, the unactivated amount of the field allowance is to be increased by the amount calculated in accordance with subsection (4).
(2)If a transferee does not hold a field allowance for the new oil field immediately before the disposal, the transferee is to hold a field allowance for the new oil field.
(3)The amount of the field allowance which the transferee is to hold is calculated in accordance with subsection (4).
(4)The amount referred to in subsections (1) and (3) is—
where—
R is the amount of the reduction determined in accordance with section 346,
E3 is the share of the equity in the new oil field that the transferee has acquired from the transferor, and
E1 and E2 are the same as in section 346.
(5)This section has effect at the end of the day on which the disposal takes place.