EnQuest swings to H1 loss, cites windfall tax

EnQuest tanked on Tuesday after the oil producer posted a first-half loss, pointing to the energy windfall tax.

For the six months to the end of June, the company reported a loss after tax of $21.2m, versus a profit of $203.5m in the same period a year earlier, "driven by the impact of the UK Energy Profits Levy".

The reported pre-tax profit was $112.9m, down from $182.6m, as revenue declined 22% to $732.7m.

Free cash flow generation was $140m, down from $332.1m and EnQuest said group net production averaged 45,480 barrels of oil equivalent per day, down from 49,726 a year earlier.

Chief executive Amjad Bseisu said: "The UK's oil and gas sector faces significant challenges and loss of competitiveness due to uncertainty following the adverse changes to the fiscal regime.

"While we appreciate the Government's intentions to improve the attractiveness of the sector through the Energy Security Investment Mechanism, we believe timely legislative reform is required to restore confidence in the UK oil and gas sector to protect jobs and deliver both energy security and decarbonisation."

EnQuest also announced that it plans to apply for the delisting of its shares from Nasdaq Stockholm.

At 0955 BST, the shares were down 12% at 15.34p.

Russ Mould, investment director at AJ Bell, said: "EnQuest became the latest North Sea firm to report a loss thanks to windfall taxes - though like its peers the small print reveals the company still generated a healthy amount of cash flow, albeit significantly lower year-on-year.

"Treatment of tax is an accounting issue and it definitely suits UK oil and gas firms to accentuate the impact of the new levies they face - it is through their decisions to shelve and pull investment that they provide a credible signal of disquiet.

"EnQuest’s problems do not just relate to a higher tax burden, production dipped appreciably compared with the same period in 2022 thanks to operational issues."