Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.
Companies

UK oil and gas group Harbour Energy says windfall tax ‘has all but wiped out’ profit

Harbour Energy, the biggest oil and gas producer in the UK North Sea, has warned it will shift investments overseas after the government’s windfall tax hit its profits. 

The company said its profit after tax fell to $8mn in 2022 from $101mn the previous year, despite higher oil and gas prices and the company raising production by almost a fifth. It said the windfall tax had resulted in a $1.5bn “one-off non-cash deferred tax charge”. 

“It has all but wiped out our profit for the year,” said chief executive Linda Cook. “Given the fiscal instability and outlook for investment in the country, it has also reinforced our strategic goal to grow and diversify internationally.”

Harbour’s “cash” tax paid in the UK — money actually given to HM Revenue & Customs — was more than $500mn, almost four times the amount paid by Shell.

The company has long been among the most vocal critics of the UK windfall tax, which was introduced last year after energy bills soared in the wake of Russia’s invasion of Ukraine.

While larger energy companies including BP and Shell have reported record profits, Harbour has complained that smaller operators like themselves are required by their lenders to hedge a greater portion of their production in advance, meaning they do not capture as much of the rise in energy prices.

Post-hedging the company received an average of $78 a barrel for its oil last year and 86p a therm for its gas. UK gas prices were above 100p a therm for all of last year and peaked close to 600p a therm in the summer.

The company is undertaking a strategic review of its future investments and has cancelled two developments and announced potential job cuts.

Still, it has been able to maintain its $200mn dividend to investors, extending it for 2023 while introducing a $200mn share buyback programme, in a sign it has seen some benefit from soaring prices last year.

Earnings before tax, interest depreciation, amortisation and exploration expenses rose to $4bn from $2.4bn in 2021.

Neptune Energy, the privately held oil and gas producer built by former Centrica chief Sam Laidlaw, also attacked the windfall tax as it announced results on Thursday.

Pete Jones, chief executive, said the higher taxes were “undermining investment” and “longer-term energy security in Europe”.

“The imposition of windfall taxes in 2022 has created significant fiscal and political uncertainty in the Netherlands, Germany and, in particular, the UK,” he added.

Neptune paid no tax in the UK last year as it was able to offset investments against the money it would otherwise have owed under the so-called super deduction introduced by Prime Minister Rishi Sunak when he was still chancellor. Only about 5 per cent of Neptune’s earnings are generated in the UK but this is expected to rise in 2023 as the Seagull development begins production.

The company expected to pay roughly $60mn in UK tax to HMRC in 2023, depending on oil and gas prices, a spokesman said. With large operations in Norway, which has long had a higher tax rate for operators, Neptune’s effective tax rate globally was 70 per cent in 2022.

Read the full article here

Leave a Reply

Your email address will not be published. Required fields are marked *