Harbour Energy joins North Sea producers' retreat ahead of tax hikes
Government plans to increase tax at next week's budget
Harbour eyes U.S. listing with next acquisition
Harbour launches sale of North Sea field stakes
Executive warns North Sea "un-investible"
By Ron Bousso
LONDON, Oct 23 (Reuters) -Top British North Sea producer Harbour Energy HBR.L wants to sell stakes in North Sea oilfields and is reviving plans for a U.S. listing, sources said, as more firms scale back investments ahead of new tax increases on the sector.
The Labour government, which was elected in July, wants to use the revenue from oil and gas to raise funds for renewable energy projects. Finance Minister Rachel Reeves will announce the tax increases in her budget on Oct. 30.
The government is also preparing new environmental guidance for oil and gas projects, which executives said could further impede investments in the ageing basin, where output has declined by around 75% since its peak in the late 1990s.
Harbour has renewed its plans to acquire a U.S.-listed company that will allow it to list and move its headquarters to the United States, sources with knowledge of the matter said.
The search was paused when Harbour decided at the end of last year to acquire Wintershall Dea's non-Russian portfolio for $11 billion, the sources said. The deal, which allowed Harbour to diversify outside the North Sea and more than doubled its production, was completed last month.
Harbour has also launched a sale process of its stakes in the Armada, Everest, Lomond, Catcher and Tolmount fields as it seeks to reduce its exposure in the North Sea, the sources said.
Harbour declined to comment on the sale process, saying it was focused on the Wintershall Dea integration.
"We are a London listed company and as long as our geographical centre of gravity is in Europe it wouldn't really make sense to move the listing," a spokesperson said.
UN-INVESTIBLE
UK North Sea producers first warned they will reduce investments after the previous Conservative government introduced a 25% Energy Profits Levy (EPL) in May 2022 in the wake of soaring energy prices following Russia's invasion of Ukraine. The tax was subsequently increased to 35% in November 2022, and extended by one year in March 2024.
Britain's Labour government said it would increase the windfall to 38% from 35% starting Nov. 1, bringing the headline tax rate on oil and gas activities to 78%, among the highest in the world. Its duration will also be extended by a year to March 2030.
The changes will also include scrapping the levy's 29% investment allowance, which lets companies offset tax from capital that is re-invested.
"The UK (North Sea) is currently un-investible. Absent a sensible fiscal regime that encourages continued investments and provide some stability, it will continue to be un-investible," Serica Energy Chairman David Latin told Reuters.
The finance ministry said in a statement to Reuters the government was "making the UK a clean energy superpower with 24 billion pounds ($31 billion) raised for green industries at this month's investment summit, and it is right that the oil and gas sector contributes to this transition by helping to fund Great British Energy."
Patrick Pouyanne, CEO of TotalEnergies, one of the largest North Sea producers, said earlier this month that he had instructed his team to halt exploration activity in the basin, where oil production started in the 1960s.
"With this political landscape, even if you find something you're not sure you can develop it," Pouyanne told analysts. "The situation in the UK is very problematic," he added.
Private-equity backed Neo Energy last month announced it will "materially slow down investment activities" while Japan Petroleum Exploration (Japex) 1662.T launched a sale process for its 15% interest in the BP-operated BP.L Seagull oil and gas field, Reuters reported.
Andrew Nunn, CEO of exploration-focused Deltic Energy DELT.L that announced on Monday plans to cut spending, told Reuters "the clear message from key investors was 'do not invest in the UK'."
($1 = 0.7708 pounds)
The decline of the North Sea https://reut.rs/3UMmE06
Additional reporting by Alistair Smout; editing by David Evans
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