Harbour Energy joins North Sea producers' retreat ahead of tax hikes

Deltic Energy

23/10/2024 15:56

* 
      Government plans to increase tax at next week's budget
    

        * 
      Harbour eyes U.S. listing with next acquisition
    

        * 
      Harbour launches sale of North Sea field stakes
    

        * 
      Executive warns North Sea "un-investible"
    

  
    By Ron Bousso
       LONDON, Oct 23 (Reuters) - Top British North Sea
producer Harbour Energy  HBR.L  wants to sell stakes in North
Sea oilfields and is reviving plans for a U.S. listing, sources
said, as more firms scale back investments ahead of new tax
increases on the sector.
    The Labour government, which was elected in July, wants to
use the revenue from oil and gas to raise funds for renewable
energy projects. Finance Minister Rachel Reeves will announce
the tax increases in her budget on Oct. 30.
    The government is also preparing new environmental guidance
for oil and gas projects, which executives said could further
impede investments in the ageing basin, where output has
declined by around 75% since its peak in the late 1990s.
    Harbour has renewed its plans to acquire a U.S.-listed
company that will allow it to list and move its headquarters to
the United States, sources with knowledge of the matter said. 
    The search was paused when Harbour decided at the end of
last year to acquire Wintershall Dea's non-Russian portfolio for
$11 billion, the sources said. The deal, which allowed Harbour
to diversify outside the North Sea and more than doubled its
production, was completed last month.
    Harbour has also launched a sale process of its stakes in
the Armada, Everest, Lomond, Catcher and Tolmount fields as it
seeks to reduce its exposure in the North Sea, the sources said.
    Harbour declined to comment on the sale process, saying it
was focused on the Wintershall Dea integration.
    "We are a London listed company and as long as our
geographical centre of gravity is in Europe it wouldn't really
make sense to move the listing," a spokesperson said.

    UN-INVESTIBLE
    UK North Sea producers first warned they will reduce
investments after the previous Conservative government
introduced a 25% Energy Profits Levy (EPL) in May 2022 in the
wake of soaring energy prices following Russia's invasion of
Ukraine. The tax was subsequently increased to 35% in November
2022, and extended by one year in March 2024.
    Britain's Labour government said it would increase the
windfall to 38% from 35% starting Nov. 1, bringing the headline
tax rate on oil and gas activities to 78%, among the highest in
the world. Its duration will also be extended by a year to March
2030.
    The changes will also include scrapping the levy's 29%
investment allowance, which lets companies offset tax from
capital that is re-invested.
    "The UK (North Sea) is currently un-investible. Absent a
sensible fiscal regime that encourages continued investments and
provide some stability, it will continue to be un-investible,"
Serica Energy Chairman David Latin told Reuters.    
    The finance ministry said in a statement to Reuters the
government was "making the UK a clean energy superpower with 24
billion pounds ($31 billion) raised for green industries at this
month's investment summit, and it is right that the oil and gas
sector contributes to this transition by helping to fund Great
British Energy." 
    Patrick Pouyanne, CEO of TotalEnergies, one of the largest
North Sea producers, said earlier this month that he had
instructed his team to halt exploration activity in the basin,
where oil production started in the 1960s.
    "With this political landscape, even if you find something
you're not sure you can develop it," Pouyanne told analysts.
"The situation in the UK is very problematic," he added.
    Private-equity backed Neo Energy last month announced it
will "materially slow down investment activities" while Japan
Petroleum Exploration (Japex)  1662.T  launched a sale process
for its 15% interest in the BP-operated  BP.L  Seagull oil and
gas field, Reuters reported.
    Andrew Nunn, CEO of exploration-focused Deltic Energy
 DELT.L  that announced on Monday plans to cut spending, told
Reuters "the clear message from key investors was 'do not invest
in the UK'."
    
($1 = 0.7708 pounds)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The decline of the North Sea    https://reut.rs/3UMmE06
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Additional reporting by Alistair Smout; editing by David
Evans)
 ((ron.bousso@thomsonreuters.com; +44 (0) 2075422161; Reuters
Messaging: ron.bousso.reuters.com@reuters.net))