Case Study

Oil assets transferred to SPV require tax calculation

Brief

A major oil company with significant downstream operating assets had entered into an agreement to sell a proportion of the assets to an SPV Co. As a result, they would incur a local tax liability.

Hickman Shearer were engaged to value the assets being transferred to estimate the potential tax liability.

Work

The key assets comprised of a mix of large oil storage tanks and pipelines.

The information required through inspection and via the operator was extensive and detailed. It required a complete regulatory review and detailed asset information assessment, including analysing maintenance records. This was in order to be able to accurately utilise the DRC approach to valuation.

The valuation also reviewed and satisfied local tax regime criteria.

Outcome

Our valuation was accepted by the Company and its tax advisors enabling them to estimate the tax liability as a result of the proposed transaction.

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