Harbour Energy’s first-half profit of $392 million is impacted by payroll tax charges
The UK’s largest North Sea oil and gas producer, Harbour Energy, has reported pre-tax net profit of $393 million (£308.44 million) for the first half of 2024.
The company’s first-half 2024 earnings and earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.2 billion were down from the same period last year. The first half of 2023 saw earnings before taxes of $429 million and EBITDA of $1.4 billion.
Following the increase in energy prices in 2022, the UK has imposed an EPL on oil and gas producers, increasing the tax rate to 75%.
For most companies, including Harbour, this tax has wiped out most of their profits. Harbour made a net tax payment of $157 million in the first half of 2024 related to the EPL.
The newly elected Labour government announced last week that it would not only maintain the EPL, but also increase the tax by 3% from November 1. The increase will take the tax rate for oil and gas companies to 78%, one of the highest rates in the world.
The tax increase is likely to affect oil and gas companies across the North Sea.
Access the most comprehensive company profiles on the market, powered by GlobalData. Save hours of research. Gain a competitive advantage.
Company profile – free sample
Your download email will arrive shortly
We are confident in the unique quality of our company profiles, but we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by filling out the form below.
By GlobalData
So far, the new government has not provided any clarity on what will happen to production licenses. Labor announced it would not issue new oil and gas licenses, but companies are unsure what will happen to the plants already in operation during the oil and gas production process, which will require “another license as part of that phase,” said Heather Plumpton, senior policy analyst at independent think tank Green Alliance.
Harbour reported that production in the first half of 2024 fell nearly 19% to 159,000 barrels of oil equivalent per day compared to the previous six months, partly due to the extended disruption to operations in the eastern Irish Sea and the maintenance closure in the UK in May.
While the company expects production to pick up in the coming months, it has also begun to shift its focus away from the UK oil and gas market.
Wintershall Dea’s upstream assets are located in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria.
The company expects to close the deal in the fourth quarter of this year.
Accordingly Offshore technologyAccording to parent company GlobalData, the oil and gas industry in the UK employs an estimated 150,000 to 200,000 people, most of them on the North Sea coast.
If production continues to decline and companies relocate to avoid high tax rates, employment in the North Sea oil and gas regions is also likely to decline.
The continued deployment of renewable energy technologies and the phase-out of fossil fuels are also expected to impact employment in the oil and gas industry.
