OT13990 | PRT: non-field expenditure - exploration and appraisal expenditure: expenditure not related to a field

OTA75\S5(1)(c)

Expenditure is not allowable to the extent that it relates to a field for which a development decision has already been made. Where an exploration or appraisal well has been spudded close to but outside a field boundary, LB Oil & Gas will not normally try to relate that expenditure to the field, provided it can be demonstrated at the spud date that the purpose of the well was not to explore or evaluate a structure within the PRT boundary. In response to a specific enquiry by UKOITC in 1983, the Board advised in a letter dated 30 June 1983 that ‘we would not normally expect to argue that expenditure on wells outside a determined PRT field related to that field.’

Deviated drilling

In looking at the place where the searching for oil etc. is carried out for these and other purposes, regard should be had to the target zone\horizon group of sands of the well and not the place where the well enters the ground (is spudded).