Harbor Energy posts losses due to windfall tax and falling prices
- Britain’s largest North Sea oil and gas producer reported an $8 million loss in the first half
- The FTSE 250 company saw its hydrocarbon production revenue fall by approximately 25%
- Britain’s energy sector has blamed the windfall tax for reducing investment.
Harbor Energy suffered a small loss in the first half as the effect of falling energy prices was compounded by high tax payments.
Britain’s largest North Sea oil and gas producer reported a loss of $8 million for the six months ending in June, after making a $1 billion profit in the same period last year.
The company saw hydrocarbon production turnover fall by around a quarter to $1.99 billion as oil and gas prices fell from their lofty highs.
Tax issues: Harbor Energy complained in March that its annual profits had been “virtually wiped out” by the UK government’s windfall tax.
Its tax bill was lower than the previous year, but the Energy Benefits Tax still resulted in the group paying $437m (£344m) to the HM Treasury.
Harbor complained in March that its annual profits were “virtually wiped out” by the UK government’s windfall profits tax, which was introduced following the rise in oil and gas prices in late 2021 and early 2022. .
Energy prices spiked due to the easing of Covid-related restrictions, which allowed people to travel more regularly, and the Russian invasion of Ukraine, which led countries to reduce their reliance on Russian energy.
They have declined sharply since then thanks to periods of warm weather that reduced heating demand, homes and businesses conserving more electricity, and fears of an economic slowdown.
In the first half of 2023, Harbor sold crude oil at an average of $76 a barrel and UK natural gas at 58 pence per British thermal unit.
The equivalent for the first half of 2022 was 82 and 69 pence, respectively.
But while they remain above historical levels, Britain’s energy sector has said the EPL has discouraged companies from expanding production in the North Sea.
Under the plan, oil and gas companies pay a 35 percent markup on their profits, meaning they have an effective corporate tax rate of 75 percent.
Harbor has blamed the tax for its recent decisions to snub the UK’s exploration licensing round, cut domestic investment and plan around 350 job cuts.
Linda Z Cook, Chief Executive Officer of Harbor Energy, commented: “We remain focused on maximizing the value of our UK oil and gas portfolio, advancing our organic development projects and disciplined capital allocation.”
It expects to produce 185,000-195,000 barrels a day this year, down from 196,000 barrels a day in the first half, partly due to drilling delays at its Beryl field.
The company’s announcement comes a day after Ithaca Energy warned it was cutting production and canceling some projects due to windfall tax.
However, Russ Mould, investment director at AJ Bell, said the problem was “not so much” the high taxes in the UK energy sector, but “the constant adjustments that make it very difficult for companies to commit to long-term projects.” term”.
Harbor Energy Stock they were 4.1 per cent, or 10 pence, lower at 231.7 pence as of early Thursday afternoon, meaning they are down 46 per cent over the past 12 months.