Harbour starts review of UK business following tax hike

Private equity-backed independent Harbour Energy confirmed today that it has embarked on a review of its UK business in response to changes to the country's windfall tax on oil and gas company profits. It follows reports that the company is planning job cuts.

UK finance minister Jeremy Hunt announced in mid-November that the government's Energy Profits Levy, which was first introduced in May last year, will increase to 35pc from 25pc on 1 January this year and be extended for two years to 2028. Representatives from the industry met with the government to urge a rethink on the tax in December.

Following the changes to the levy, Harbour, which is now the UK North Sea's biggest oil and gas producer, has had to reassess its future activity levels in the region, a company spokesperson told Argus. While it will continue to support investment within its existing portfolio, Harbour has decided to scale back spending on areas such as new exploration licensing. "As such, we have initiated a review of our UK organisation to align with lower future activity levels," the spokesperson said.

Mike Tholen, sustainability director at industry body Offshore Energies UK (OEUK), said the tax increases, along with the threat of more to come, have made the UK "a much riskier place to invest" and have made it far more likely that investors will look overseas instead. Even before the increase in the levy, Harbour's chief executive Linda Cook noted in October that "the only way companies like us can manage [fiscal risk] is by choosing which countries to invest in and which to leave".

Harbour Energy's most recent set of results showed that it made a profit of $984mn in the first six months of 2022, compared with just $87mn in the same period of 2021. The company began paying dividends in May last year, with a maiden payout of 11¢/share amounting to a total payment to its shareholders of $98mn.

By Jon Mainwaring