Headline tax rate on the UK’s oil and gas sector reduction to 40% from 50% or 67.5% for mature fields could lead to a value increase of up to 20% for new developments and up to 70% for older sites, according to new analysis from GlobalData.

The report ‘Challenging Economics Threaten Effectiveness of Latest UK Oil Tax Cut’ outlines how the impact will differ significantly across company portfolios, as several fields are already not taxable due to the low oil prices.

The 2016 UK Budget by UK Chancellor George Osborne on 16 March has already included significant reductions in headline tax rates for upstream oil and gas producers.

These cuts, which have been larger than anticipated, reduced the level of state takings on all UK projects, although they have been more favourable towards existing and older assets.

The Petroleum Revenue Tax (PRT) has been applicable only to projects that secured development consent before March 1993, and was permanently cut to 0%. This move has been taken to benefit older assets, the report stated.