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Tullow Oil : FTSE listed Oil & Gas giant benefits from significant cash benefit through robust R&D claims

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CLIENT/ Overview

Tullow Oil PLC (LSE:TLW) (‘Tullow’) is an FTSE listed oil and gas exploration and production company. They have over 30 exploration interests and production licences across 8 countries. As a leading company in this sector, Tullow has invested substantially in the development of technical solutions that enable the company to explore in regions that have previously not been thought to be conducive for the same.

Tullow Oil: FTSE listed Oil & Gas giant benefits from significant cash benefit through robust R&D claims

Problem Statement

Tullow has a large team of scientific and technical experts in the oil and gas sector. The company employs some of the most experienced and knowledgeable people in the industry in areas such as geology, reservoir engineering, petroleum engineering and associated infrastructure engineering. The company is also very cognizant of health and safety and ESG and has undertaken several initiatives to lead in these areas. 

Tullow had historically made claims for several years. This was done primarily by considering specific projects which were known to have very high research content. However, the process for preparing claims was onerous and required a substantial amount of time from the technical teams.

Invenics reviewed Tullow's previous claims and identified that there were several areas where they could be enhanced. We explained to the team that in addition to the core research, the full extent of development activities (to the extent they were resolving technological uncertainties) could also be claimed and lead to a higher benefit. Following this, we were engaged to provide assistance in preparing R&D Claims for the company.

Problem Statement

Our Process

Invenics initiated the claim preparation process by helping the Tullow team to review their full financial data and obtain a complete view of all the projects and activities being undertaken by the company. Combining data of substantial complexity from multiple sources (SAP system, payroll records, timesheets etc.), we developed a comprehensive model of how a much larger number of projects could be assessed without needing significantly more time from the technical teams.

Following this, several technical meetings were held with the technical team members of Tullow to discuss the guidelines on the meaning of research and development for tax purposes and understand the nature of work performed. Projects in the areas of subsurface development, modeling, seismic data processing, pipeline improvements were found to have high eligibility for R&D. A number of projects discussed were found to be leading edge in the industry, including the development of a highly efficient heating system for transporting waxy oil through pipelines. The technical teams also presented instances where their developments were the subject of patent applications and external publications.

Following the technical discussions and assessments, we compiled all the information and developed a comprehensive report for HMRC. The claim was agreed within a short time window and a substantial cash saving was realised.

Our Process

Key Metrics

With the involvement of the Invenics team, the client’s R&D claims increased substantially and have given a very attractive return on investment to the company. Additionally, we have helped them establish a clear, repeatable process that simplifies the complexities and gives an opportunity to prepare claims in a near real-time manner. This means that the claims can be prepared comprehensively, with a high degree of confidence and cash flow is accelerated.

Client feedback – “Invenics provided us with a clear process for simplifying what could be a complex undertaking in preparing the R&D claims. With their strong knowledge of the technology in the Oil & Gas sector, they were able to uncover significantly more R&D activities and delivered excellent supporting reports. The improved process they have helped us to setup will be instrumental in us creating high quality R&D claims year on year.”

Key Metrics