Member Info for flexmw

Shared from Modestus on the ENQ board - worth a read..

https://www.telegraph.co.uk/business/2024/08/05/miliband-oil-and-gas-tax-crackdown-destroy-north-sea/

EnQuest warns higher profit levy will prove ‘highly damaging’ for jobs across UK

Ed Miliband’s North Sea tax crackdown risks destroying the UK’s oil and gas industry and making Britain even more dependent on imports, a leading operator has warned.

EnQuest, which operates some of the UK’s most strategically important offshore assets, hit out at a decision to add three percentage points to the taxes imposed on oil and gas profits and strip the industry of key tax breaks.

It comes as Mr Miliband, the Energy Secretary, seeks to accelerate the shift to net zero.

A spokesman for the company said: “EnQuest is extremely disappointed by the Government’s decision to increase and extend the energy profits levy.

“Reductions in investment allowances will stifle investment in the sector and will prove to be a highly damaging move for jobs across the UK.”

The planned tax increase and loss of investment allowances were not announced in Chancellor Rachel Reeves’ recent pre-Budget speech, but instead published online late in the afternoon. Documents said that the levy was designed to tackle the “extraordinary profits of oil and gas companies” operating in UK waters.

They added: “Money raised from these measures will support our clean energy transition, increasing security and providing sustainable jobs for the future.”

Mr Miliband and Ms Reeves had repeatedly pledged that Labour would raise oil and gas taxes, but the sudden and unexpected timing sparked consternation among North Sea operators, forcing Treasury officials to organise an evening ring-round of chief executives in an attempt to reassure them.

EnQuest said the attempt had not worked.

The spokesman said: “Rather than accelerating decarbonisation, these measures will accelerate the decline of UK oil and gas production, making the country even more dependent on higher carbon imports, whilst harming a vital indigenous industry and the hundreds of thousands of jobs it supports.

“It will also have a disproportionate effect on British independent companies like EnQuest, which has invested over £4bn in the UK North Sea over the last decade and generates most of its revenues in the UK – as opposed to the oil majors who generate the vast majority of their profits overseas.”

Enquest operates platforms around Scotland including Magnus, the most remote in UK waters, located more than 100 miles north of Shetland.

It also operates several key pipelines that carry oil and gas from offshore platforms to onshore processing facilities such as Sullom Voe in Shetland – meaning its assets are strategically vital to the UK’s energy security.

A follow on to yours Sasa…

EPL changes mean ‘companies like Serica won’t invest’ says chairman

Serica Energy's chairman has argued that changes to the EPL will lead to firms like his not investing in the UK and job losses.

https://www.energyvoice.com/oilandgas/557707/epl-changes-mean-companies-like-serica-wont-invest-says-chairman/

North Sea oil and gas producers say UK windfall tax is a 'wrecking ball'

"I hope the government do something sensible rather than cast a wrecking ball across the North Sea," David Latin, CEO of North Sea producer Serica Energy (SQZ.L), opens new tab,told Reuters.

"The risk is that they will try to reduce capital allowance and that will mean we won't invest. As the basin stops investing, output starts declining much faster and revenue drops," Latin said.

https://www.reuters.com/business/energy/north-sea-oil-gas-producers-say-uk-windfall-tax-is-wrecking-ball-2024-08-01/

Viaro to take full ownership of Shell and Exxon Southern North Sea assets

https://www.energyvoice.com/oilandgas/north-sea/557487/viaro-energy-to-take-full-ownership-of-shell-and-exxon-southern-north-sea-assets-uk-exxonmobil-clipper-leman-shamrock-caravel/

JOG RNS this morning - last paragraph to take note of:

Jersey Oil & Gas (AIM: JOG), an independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, advises of changes announced to the Energy Profits Levy ("EPL") in a policy paper published on 29 July 2024 as part of announcements made by the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP.

· EPL to increase to 38% from 1 November 2024, bringing the headline rate of tax on upstream oil and gas activities to 78%

· EPL to be extended to 31 March 2030 with the Energy Security Investment Mechanism remaining in place meaning the levy will cease to apply if prices fall consistently to, or below, historically normal levels for a sustained period

· The EPL's main 29% investment allowance for qualifying expenditure incurred will be removed from 1 November 2024

· Capital allowance claims that can be taken into account in calculating EPL profits will be reduced; however the extent of the reduction will only be announced in the October Budget following engagement with stakeholders

The Greater Buchan Area joint venture will carefully consider the impact of the tax changes to the economics of the development and project sanction. The full implications will, however, only be clear when the level of capital allowance claims available as deductions to the EPL are provided in the October Budget.

PMG - Parkmead related but a couple of snippets that relate to Serica…

Fynn licence opportunity for ‘significant value’ despite North Sea uncertainty

‘While Parkmead appears to be moving forward with its wider drilling strategy, despite delays to its Skerryvore project, other operators are scaling back or altering their plans.’

‘Meanwhile, Serica Energy and Harbour Energy are among other firms pivoting away from the UK Continental Shelf.

However, other North Sea firms are continuing to invest in the UK, with Ithaca Energy and Eni agreeing a deal to consolidate their North Sea assets.’

https://www.energyvoice.com/oilandgas/north-sea/exploration-production/556913/parkmead-group-fynn-beauly-licence-north-sea-oil-gas-uncertainty/

Incase the link doesn’t work :

Ed Miliband has told the energy ­industry that he will not ban oil and gas drilling in the North Sea after claims that he had overruled officials and imposed a moratorium on new licences.

The energy secretary moved to ­reassure producers after reports that he intended to block dozens of licences and impose an immediate ban on ­drilling in new North Sea fields.

The suggestion had led to panic in the industry as it appeared to go beyond Labour’s position during the election campaign that it would continue to support the exploration of new oil and gas fields where licences had already been granted. “We’ve been fielding calls all day from panicked executives who thought their firms were about to go bust,” one official said.

The Tories said Labour was waging “war” on northeastern Scotland and ­accused Miliband of “economic and ­environmental illiteracy”.

A spokesman for Miliband called the claim a “complete fabrication”. ­Labour’s policy was unchanged, he added, and it would honour all existing exploration licences and “manage existing fields for the entirety of their lifespan”.

“As previously stated, we will not issue new licences to explore new fields,” he said. “We will not revoke ­existing oil and gas licences and will manage existing fields for the entirety of their lifespan. We are working with the North Sea Transition Authority to ensure a fair and balanced transition.”

There is still concern that a planned windfall tax on the profits of oil and gas producers may deter investment. However, one source said that although some producers were “really worried”, others were more relaxed. “There is no real evidence at the ­moment that it is going to put off investment, but it is still early days.”

The Conservatives made future ­exploration of Britain’s fossil fuel ­reserves a key issue at the election, pledging to legislate to guarantee annual licensing rounds.

However, the bill was never passed and Miliband has made clear that ­although Labour will honour existing contracts, it will not allow new licences.

Ed Miliband vows not to ban North Sea oil and gas drilling

Energy secretary responds to claims he was about to impose an immediate moratorium on new licences

https://www.thetimes.com/uk/environment/article/ed-miliband-vows-not-to-ban-north-sea-oil-and-gas-drilling-3rllkd5lx

With this latest purchase Chris Cox has spent ~ £600k of his own money… & been in the role 7 days..

That’s some buy by the new CEO..

London, 8, July 2024 - Serica Energy plc (AIM: SQZ), confirms that Christopher Cox, Chief Executive Officer, purchased 306,597 ordinary shares at an average price of £1.390797819 per share in the Company.

Following this transaction, which is detailed in the PDMR Notification Dealing Form below, Mr Cox is interested in 432,027 ordinary shares in the capital of the Company, representing 0.11065% which is calculated on the total number of ordinary shares carrying voting rights of 390,457,635.

From Friday -

David Latin, Chairman of producer Serica Energy (SQZ.L), said that without clarity, investments and taxes from the sector would drop rapidly.

"There's this misunderstanding which is that somehow we're a golden goose and we'll just keep laying eggs. But if you don't feed the goose with investment dollars, it'll keel over and there'll be no more eggs," Latin told Reuters.

https://www.reuters.com/markets/commodities/north-sea-oil-producers-urge-labours-starmer-tax-clarity-2024-07-05/

Time to start executing on those ‘attractive M&A opportunities’!! David Latin has been talking the talk lately it’s time for them to ‘walk the walk’…

First redetermination under US$525 million borrowing facility

London, 3 July 2024 - Serica Energy plc (AIM: SQZ), is pleased to announce that it has completed the first semi-annual redetermination under its reserve-based lending ("RBL") facility. Reflecting the increased reserves, together with the programme of hedging recently implemented, the borrowing base has been increased from US$463 million up to the full amount of the committed facility of US$525 million.

Following this redetermination, and reflecting the previously reported cash and cash equivalents of £301.6 million and debt drawings of US$231.0 million (£182.0 million) as at 26 June 2024, Serica's liquidity is now in excess of £500 million.

Martin Copeland, Chief Financial Officer of Serica, said:

"We are grateful for the support of our bank group in completing our first redetermination under the new RBL. Serica's robust liquidity supports our ability to deliver on the two-pronged strategy of investing in our assets and executing on attractive M&A opportunities."

New CEO makes his first share purchase…. very good to see….

London, 2, July 2024 - Serica Energy plc (AIM: SQZ), confirms that Christopher Cox, Chief Executive Officer, purchased 125,430 ordinary shares at a price of 135.5p per share in the Company.

Following this transaction, which is detailed in the PDMR Notification Dealing Form below, Mr Cox is interested in 125,430 ordinary shares in the capital of the Company, representing 0.032124% which is calculated on the total number of ordinary shares carrying voting rights of 390,457,635.

North Sea tax regime as complex as a ‘war zone’, warns oil group

Serica ‘actively’ looking overseas ahead of potential increase in UK government’s windfall levy on producers

https://www.ft.com/content/cde81dce-706f-451d-88a5-9edcf0c48480

Completion of Buyback Programme

London, 24 June 2024 - Serica Energy plc (AIM: SQZ), a British independent upstream oil and gas company, announces that following the purchase of ordinary shares on 21 June 2024, the Company's share buyback programme (the "Programme"), as announced on 24 April 2024, has been completed.

Over the course of the Programme, the Company has acquired in aggregate 8,437,478 ordinary shares of US$0.10 each in the Company (the "Ordinary Shares") between 24 April 2024 and 21 June 2024 for a total consideration of approximately £15 million[1], at a volume weighted average price of approximately 177.78 pence per share.

All purchases made under the Programme were made through the Company's joint broker, Peel Hunt LLP.

The Company has 393,468,408 Ordinary Shares in issue, of which 3,010,773 Ordinary Shares are now held in treasury. Therefore, the total number of Ordinary Shares carrying voting rights is 390,457,635.

NS Related :

Labour “fails” oil and gas industry as policies risk downgrades for Ithaca and EnQuest

https://www.energyvoice.com/oilandgas/north-sea/555457/labour-policies-risk-downgrades-ithaca-enquest/

I’ve read PMG have circa £180m of corporate tax losses to be used against PMG assets etc… I appreciate they’re NS with some overseas assets but on the figures you’ve stated Monmur , Serica could pick up PMG for next to nothing - develop Skerryvore & offset costs against those tax losses which must be attractive with the current situation….

Stifel spells out there view on Labours proposed policy, a link to a tweet i’ve seen for those interested & at the bottom of their note :

Serica Energy reduced from 316p to 232p and remains rated Buy.

https://x.com/lordbadshot/status/1802625506946203805?s=46&t=uz3in5yMdDdYvqnOjeh9vg

Labour’s North Sea tax pledge will kill investment, industry warns

Operators say they will be unable to make money if the allowances are scrapped.

“You need to make a return of 15 per cent to 20 per cent to even get out of bed, frankly,” said David Latin, chair of Aim-listed extractor Serica. “Under the new regime they won’t pay back at all. It is not likely you will cover your cost of capital, you won’t get anywhere near it.”

https://www.ft.com/content/c12dda0a-140a-40c6-a1ce-a0da14e292ff