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EnQuest to acquire Harbor Energy business in Vietnam

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Acquisition: EnQuest plans to buy Harbor Energy's Vietnamese business in $84 million deal
  • EnQuest to acquire Harbor’s stake in the Chim Sáo and Dua production fields
  • The general tax rate on North Sea oil and gas production activities in the UK is 78%.

EnQuest plans to buy Harbor Energy’s Vietnamese business in an $84m (£68m) deal as it looks to expand its operations outside the UK.

The London-based energy exploration company will acquire Harbor’s majority stake in the Chim Sáo and Dua production fields, which it plans to exploit upon completion of the transaction.

Located about 400 kilometers southwest of the port city of Vung Tau, the two fields’ net reserves total an estimated 7.5 million barrels of oil equivalent, while their contingent resources are approximately 4.9 million barrels of oil equivalent. boe.

Net production from the fields is expected to average 5,300 boepd in 2025, of which approximately 73 percent is high-quality oil.

The acquisition, which EnQuest expects to close in the second quarter, will expand its presence in Southeast Asia beyond Malaysia, where it helps operate the PM8 and Seligi fields with state oil and gas company Petronas.

Although the acquisition has a total value of $84 million, EnQuest said it would pay only about $35 million net of interim period cash flows.

Acquisition: EnQuest plans to buy Harbor Energy’s Vietnamese business in $84 million deal

Amjad Bseisu, CEO of EnQuest, said: “This deal underscores our commitment to growth, a disciplined approach to M&A and deploying capital where we see the most favorable returns.”

EnQuest has been looking to expand its reach abroad since the UK government introduced the Energy Profits Tax (EPL) in May 2022 after energy prices rose due in part to the Russian invasion of Ukraine.

Under the LPE, oil and gas producers pay a 38 percent surcharge on profits from extraction activities in the North Sea.

This means the UK’s overall oil and gas production tax rate is 78 per cent, one of the highest in the world.

Previously, businesses could use an investment subsidy which could help them save 91p in tax for every £1 they invested, but the new government abolished this tax break at the beginning of November.

Oil and gas companies have blamed the windfall tax for discouraging investment in domestic production, forcing companies to cut jobs and eliminating profits.

The Texas-based Apache Group announced in November that it would close all operations in the North Sea by the end of 2029, saying the PLA had made production “uneconomical.”

Two months earlier, EnQuest’s Bseisu warned that the tax was “causing irreversible damage to an indigenous and strategically important British industry”.

He called on the current government to institute a “progressive fiscal regime that recognizes the maturity of the North Sea and re-establishes the UK as a globally competitive investment basin”.

EnQuest posted a pretax loss of $30.8 million in 2023, its second consecutive annual loss, after incurring a net EPL charge of $77.2 million.

EnQuest stock around midday on Wednesday they were up 2.7 per cent to 13.6p, although they have more than halved since the EPL was introduced.

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