That's a very interesting point. If we assume that its not unreasonable that producers ought to have a chance of profitability(for the sake of many millions of shareholders)and if it were true that the oil is costing as much or more to produce and explore for than it is worth, one might deem the 12.5% gross take as  not unreasonable in this price environment.
I can agree that a negative value on production taxation is not good. It ropes the state into the risks inherent in the business. In your example the combined tax revenues amounted to near nothing - effectively leaving the royalty.(I don't remember the overalltotal tax take - just that it was small and that production tax part was negative)