24th Aug 2023 10:50
(Alliance News) - Harbour Energy PLC is diverting some of its coffers into areas such as Mexico and Indonesia as windfall tax measures keep a lid on North Sea investments.
The oil and gas firm said the UK government's energy profits levy has "impacted our activity levels in the UK". Harbour struck a similar tone to Ithaca Energy PLC, who on Wednesday said investment across its "operated and non-operated portfolio has and will reduce" due to the energy profits levy.
Harbour Energy said "We continue to leverage our operational control and scale to realise cost savings including through our supply chain. In response to the energy profits levy in the UK, we scaled back our activities in certain areas and acted decisively to manage our cost structure. This included a review of our UK organisation, which is expected to deliver annual savings of USD50 million from 2024, following a USD16 million one-off charge taken in our half-year financial statements."
The London-based oil and gas company - which has interests in the UK, Norway, Indonesia, Mexico and Vietnam - said pretax profit for the first half of 2023 dropped 71% to USD429 million from USD1.5 billion the year before. Revenue and other income fell to USD2.02 billion from USD2.67 million.
Edison analyst Andrew Keen labelled it an "anaemic set of results".
"January's increase in the windfall tax on energy companies bites hard," Keen added.
"Harbour Energy faces a very uncertain market environment, buffeted by a windfall tax that is set to remain in place until 2028, political back-and-forth over the granting of new North Sea drilling licenses, and a general ambiguity over the government's climate policies. The company has thus sought to diversify into other markets – by, for example, investing in exploration in Mexico and Indonesia. As the fossil fuel industry in the UK hangs in the balance, producers like Harbour Energy are hedging their bets."
Harbour Energy Chief Executive Officer Linda Cook said the company has furthered its "strategic investment opportunities outside of UK oil and gas - in Indonesia, in Mexico and in carbon capture storage".
"These have the potential to materially increase our reserve life, support shareholder returns and diversify our company over time," Cook added.
Harbour Energy shares traded 2.3% lower at 236.10 pence each in London on Thursday morning.
By Eric Cunha, Alliance News news editor
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