- Harbour’s pre-tax profit of $597m reduced to just $32m after taxation
- Chancellor confirmed on Wednesday EPL will be extended to March 2029
FTSE 250 oil firm Harbour Energy has seen the vast majority of its profits wiped out by Britain’s Energy Profits Levy for the second consecutive year.
Britain’s biggest North Sea oil producer posted a pre-tax profit of $597million for the 12 months to 7 March, falling to just $32million after tax, with $525million paid out to the energy windfall tax – an effective tax rate of 95 per cent.
The EPL was introduced in 2022 in response to booming oil and gas profitability as Britons struggled to pay their bills.
It resulted in an eye-watering $1.5billion bill for Harbour Energy, dragging its pre-tax profit from $2.5billion to just $8million.
Drained: Harbour Energy’s profits are wiped out again
Harbour Energy told investors it was ‘currently assessing the potential impact’ after Chancellor Jeremy Hunt confirmed in his Spring Budget on Wednesday that the Energy Profits Levy would be extended for another 12 months to the end of March 2029.
The group has previously cut British jobs and scaled back North Sea spending in efforts to diversify its exposure abroad, partly in response to the EPL.
It posted revenues of $3.7billion for last year, down from $5.4billion in 2022, reflecting lower volumes and oil prices. Oil prices neared $120 a barrel in 2022, but are now trading at less than $80/bl despite recent uncertainty caused by attacks on ships in the Red Sea.
Harbour Energy in December agreed the takeover of Wintershall Dea’s non-Russian oil and gas assets in a $11.2billion deal, which will make it one of the world’s biggest independent producers.
Boss Linda Cook said: ‘We remain focused on the successful completion of the Wintershall Dea acquisition and the ongoing safe and efficient management of our existing portfolio.’
Mark Crouch, analyst at investment platform eToro, said the takeover of Wintershall Dea ‘stands to transform the business more than doubling the oil and gas company’s daily production and diversify its operations away from the UK’.
He added: ‘With global oil demand reaching a new all-time high in 2023, investors will have high hopes for the Wintershall acquisition set to complete in Q4 this year and the potential that it offers.
‘Looking back to Harbour’s inception and their acquisition of Premier Oil in 2021, Harbour Energy has since paid down 90 per cent of the resulting $2.7 billion debt and introduced one of the most attractive dividend yields in the sector, which they have increased again by 9 per cent following this morning’s update.’
