Tax breaks have led to an increased resurgence in oil and gas exploration in UK waters, according to a report by Deloitte.

During the third quarter of 2012, 17 exploration and appraisal wells were drilled on the UK Continental Shelf (UKCS) - an increase of 6% when compared to the same period in 2011 when 16 wells were drilled and a 6% decrease against the second quarter of 2012.

The report from the Big Four firm's petroleum services arm, reveals that when third quarter drilling is compared to drilling activity in the first quarter of 2012 there was a 55% increase. During the first quarter of 2012 a total of 11 exploration and appraisal wells were drilled.And when comparing the levels of drilling activity during the first three quarters of 2011 at 36 wells against the same period of 2012 at 46 wells, there has been an increase of 28%, which represents ten more wells being worked on.

While, current levels of activity are down compared to 2009 and 2010 where totals of 79 and 74 exploration and appraisal wells were drilled respectively. There are still three months of the year to go and therefore drilling levels in the UK could well exceed 2010 levels.The upswing in activity has been spurred on by UK government tax breaks for operators in the UK North Sea as it attempts to reverse the decline in North Sea production by stimulating further investment.

In July, the government introduced a new field allowance for shallow water large gas developments and in September announced a brown-field allowance to promote further investment in mature producing fields.

The Big Four' firm's petroleum services group report said: 'Other positive announcements in the UK government's Budget 2012 with regards to the extension and changes in field tax allowances should stimulate further exploration, appraisal and development activity.'