Harbour Energy has confirmed that it will be cutting its UK workforce following the November hike in North Sea oil-and-gas production’s windfall tax.
Harbour stated that after the energy profits tax on oil and natural gas was increased from 25% to 35%, it now faces a US$600mln tax bill in 2022. This is more than twice what it paid for in 2021.
According to reports, Harbour, North Sea’s largest producer and listed on FTSE250, has made hundreds of job cuts in its 1,700-strong workforce. The focus will be on Aberdeen, its North Sea hub.
Harbour stated that the full-year earnings before taxes would be US$4.1bn. This is up from US$2.4bn 2021. The production output increased to 208,000 barrels per day from 175,000. Revenue is expected to be about US$5.4bn.
The net debt will also drop to US$0.8bn by 2021 from US$2.3bn.
These profits indicate that the tax bill will be around 14.6%.
Harbour boycotted the UK’s latest oil and gas licensing round earlier this week. He will no longer pursue “opportunities at TotalEnergies SE” (NYSE:TOT) in Elgin Franklin where it holds a 19.3% share.
The oil company stated that 85% of its US$1.1bn capital spending came from UK operations. This is in advance of a review that will see the company aligned with “lower future activity and investment levels” in the country.
Chief executive Linda Cook stated that while oil and gas prices have returned to normal levels, the UK still has a 75% tax rate due to recent tax changes. This makes it less attractive to invest in the country.
She said, “The energy profits levie necessitated an assessment of our future activity levels within the UK and strengthened our ambition to expand and diversify internationally.”