Uncertain future: Deltic Energy has attacked the UK’s ‘hostile political environment’
Deltic Energy has hit out at the UK’s “hostile political environment” by warning it may have to pull out of a major North Sea project.
Shares in the Aim-listed exploration company fell 47 per cent, or 18.1 pence, to 20.4 pence in the update, which relates to Deltic’s 30 per cent stake in the Pensacola well, which is majority owned and operated by Shell.
It is the latest North Sea company to sound the alarm over the government’s windfall tax on UK oil and gas producers. The tax means they pay a 75 percent tax rate.
Labor would increase this to 78 per cent while removing tax breaks for investment.
Deltic chief executive Graham Swindells attributed the “struggle to find a way to advance a project like Pensacola – which is one of the biggest discoveries in the North Sea in recent decades – to politicians using the industry as a a ‘political football'”.
The company blamed “tinkering” with the tax, as well as “recent rhetoric emanating from the Labor Party”, for creating uncertainty that hampered its efforts to find a partner for the project.
It also believes investor sentiment means it will not be able to raise the £15m it needs to cover costs through traditional equity investors.
He described this as “frustrating”, given a recent assessment valuing Deltic’s stake in the project at £160m.
Deltic said that if it cannot find a financing solution by the end of this month it would have to withdraw from the project.