Harbour Energy PLC (LSE:HBR) has urged the British government to consider carefully the potential consequences of raising or extending the ‘windfall tax’ on oil and gas companies, or risk pushing away investments in the domestic industry.
The company, the UK’s largest independent producer, today said it expects the UK Energy Profits Levy (the ‘windfall’ tax) will amount to US$400mln of its overall US$900mln tax bill for 2022.
Chief executive Linda Cook, meanwhile, highlighted that the Energy Profits Levy (EPL) has created uncertainty for operators like Harbour and said its investors are advocating for investments elsewhere.
“While we fully recognise the significant challenge in the UK to put public finances on a sustainable footing, we urge the government to carefully consider the consequences of any increase in or extension of the EPL,” Cook said in a statement.
“At a time when oil and gas producers are being asked to invest more to help ensure the UK's energy security and are considering longer term, material investments in CCS [carbon capture and storage], additional taxes would run the risk of undermining our ability to do either."
Harbour this morning confirmed higher production at lower costs as the UK’s largest independent oil and gas operator released its trading update for the first nine months of 2022.
Its estimated revenue grew to US$4.1bn in the first nine months after it produced about 207,000 barrels oil equivalent (boe), up 27% on the same period last year.
The company upgraded its production guidance with full-year volumes now anticipated in ‘the upper half’ of its previously stated range of 200,000 to 210,000 barrels oil equivalent per day (boepd).
Costs were said to average US$14 per barrel, down 18% vs 2021, meanwhile, oil and gas prices are significantly higher this year – averaging US$80 per barrel for oil and 86p per therm after hedging (underlying pre-hedge commodity prices would be US$105 and 209p).
Harbour reduced its estimated capex spend for 2021 to about US$1.0bn versus its previous guidance of US$1.2bn due to the weaker pound and a later-than-expected delivery of drill rigs.
Free cash flow for the full year is forecast between US$2bn and US$2.2bn, compared to previous guidance of US$1.8bn to US$2.0bn.
"Harbour is delivering operationally with higher production volumes and lower costs, supported by improved efficiency and our capital investment programme,” Cook said.
“We also remain focused on reducing our own greenhouse gas emissions and advancing our two UK CCS opportunities, Harbour-led Viking CCS in England and Acorn in Scotland.
She added: “Our company is proud to be the UK's largest oil and gas producer and, through the combination of these activities, contributing meaningfully to domestic energy security while at the same time working to help realise a shared ambition of UK leadership in CO2 capture and storage.”