EnQuest CEO Criticizes Britain's Windfall Tax Impact on North Sea Oil & Gas Industry

Britain's windfall tax on North Sea oil and gas companies' profits is causing irreversible damage, according to EnQuest's CEO. The Energy Profits Levy has led to a decline in investments and outputs. Despite missed profit estimates and reduced production, EnQuest plans to explore opportunities in Southeast Asia.

Britain's windfall tax on North Sea oil and gas companies' profits is causing irreversible damage to the industry, according to EnQuest's CEO, who joined critics of the government's plan to increase the levy.

EnQuest reported a profit after taxation of $30.3 million for the six months ended June 30, missing analysts' estimates and compared with a loss of $21.2 million last year. Despite an initial dip, its share price rose by 0.7% early Thursday.

CEO Amjad Bseisu expressed disappointment with the ongoing application of the Energy Profits Levy (EPL), which Britain introduced after a spike in energy prices in 2022. The new Labour government plans to raise the EPL to 38% starting Nov. 1, bringing the headline tax rate on oil and gas activities to 78%, one of the highest globally.

An industry group warned this change could result in a £12 billion ($15.77 billion) revenue drop for the government and accelerate a decline in North Sea production.

EnQuest's first-half production fell 6% to 42,771 barrels of oil equivalent per day (boepd), with expectations for full-year production in the lower half of the guided 41,000 to 45,000 boepd range. The company attributed this to delays in well interventions and a failed infill well. However, positive free cash flow and a stake sale in the Bressay North Sea field helped reduce net debt to $321 million by June-end.

(With inputs from agencies.)