RE: Times Article (paywall)26 Aug 2022 00:32
Nothing new in that article -
Harbour Energy to be freed of debt after tenfold rise in profits
Harbour has benefited from high energy prices and is to increase its chare buyback programme by 50 per cent to $300 million
High energy prices have boosted profits at Harbour Energy and allowed it to pay down more than $1 billion of borrowing in six months, putting it on track to be debt free by next year.
The biggest oil and gas producer in the UK North Sea increased the scale of its share buy-back programme by 50 per cent to $300 million after it cut net debt from $2.3 billion in December to $1.1 billion. Pre-tax profits rose more than tenfold to $1.49 billion in the six months to the end of June compared with the same half last year.
Harbour expects that the energy profits levy, which was introduced in May, will cost it about $300 million across the financial year with $170 million being paid in December and the remainder in early 2023.
Capital spending of $1.2 billion will help to partly offset the additional 25 per cent charge but Linda Cook, the chief executive, said the Westminster tax grab meant that her company had “hundreds of millions less dollars to spend” in the UK.
Oil producers can apply to get back up to 91p out of every £1 from the levy through investment allowances but Cook suggested that that was not helping projects to be sanctioned more quickly. She said: “It marginally helps the economics of some projects but the bigger impact is we have hundreds of millions of dollars less to spend every year because our taxes are higher. For us to undertake a drilling programme or develop a project it takes months if not years of planning.
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“The notion that all of a sudden because the investment allowance is more attractive we can do a lot more work next year is a little bit unreasonable. Most of our rigs for next year are already locked so it is difficult to make a change in the investment plans that quickly.”
Much of Harbour’s spending for this year is going into increasing production across its UK assets with investment in drilling and well interventions. It has also agreed two new North Sea projects with appraisal drilling on licences in the Leverett oilfield and the development of the Talbot area where first oil is expected in 2024.
Linda Cook, Harbour’s chief executive, said that energy profits levy had left the company with less cash to invest in Britain.
Cook said Harbour continued to look for another area where it could build a substantial production base and the introduction of the energy profits levy had underscored that ambition. She said: “We have always had a strategy to want a more diverse portfolio than we do today. We have always been uncomfortable with the fact we have a lot of eggs in the UK basket and had the ambition to establish a material base of production in at least one other region. That has just been reinforced by what we have seen taken by the fiscal actions in the UK.”
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