RE: HBR - Outstanding Results24 Aug 2023 18:21
FT
Harbour Energy to increase UK oil investments ahead of election
Chief executive attributes plan to current attractive tax deductions for new expenditure
Linda Cook, chief executive of the London-listed producer, said that, while the company was still determined to diversify outside the UK, there was a “window of opportunity” before 2025. She linked that partly to the large tax breaks for investment embedded in the windfall tax.
“Our UK capex this year is actually a little bit higher than it was last year,” Cook said, adding they were looking at “short-cycle, high-return opportunities”.
Producers can limit the amount of tax paid under the measure, which was introduced in response to soaring household bills during the energy crisis, by as much as 91p in the pound by offsetting it against new investments.
Cook said the company was continuing to lobby the government over including other investments and expenditure in the deductions available under the windfall tax. Among the deductions it would like included under the measure — formally known as the Energy Profits Levy (EPL) — are investments in carbon capture and storage projects, and decommissioning costs.
Harbour is involved in two CCS projects in the UK that were recently awarded government backing to proceed, including the Viking project on Humberside and Acorn in Aberdeenshire.
“We need the cash flow in order to do that and if you’re taking it all away with the EPL it makes it more difficult, so we continue to lobby them on that,” Cook said.
Cook said the company would continue to pursue potential mergers or acquisitions with a view to diversifying its operations outside the UK, partly as a result of the EPL.
Harbour had been reported earlier this year to have held preliminary talks with Talos, a US-based producer. But a person familiar with the conversations said a tie-up between the two companies was no longer being pursued.
The company has reduced its net debt to near zero, from $2.9bn in 2021 when it completed its merger with Premier Oil.
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