EnQuest slams windfall tax as revenues slide

Posting interim results, the London-listed exploration and production company - which is largely focused on the North Sea - said it was "disappointed" with the ongoing application of the levy, "despite operating in an environment where no windfall conditions exist".

Amjad Bseisu, chief executive, continued: "The current fiscal regime is causing irreversible damage to an indigenous and strategically important UK industry.

"The UK energy industry needs a progressive tax regime that recognises the maturity of the North Sea and re-establishes the UK as a globally competitive investment basin."

The Energy (Oil and Gas) Profits Levy was introduced in 2022 to stop firms unfairly profiting from the spike in wholesale prices caused by Russia’s invasion of Ukraine.

Currently standing at 35%, the levy applies to all companies operating in the UK and on the UK Continental Shelf. At the March budget, then chancellor Jeremy Hunt extended it until spring 2029.

The criticism came as EnQuest posted a near 20% decline in revenues and other operating income, to $587.9m, in the six months to 30 June.

Production at the end of June averaged 42,771 barrels of oil equivalent per day, down 6% year-on-year, while the realised oil price rose 10% to $83.40 per barrel.

Adjusted earnings before interest, tax, depreciation and amortisation fell 8% to $367.5m. On a statutory level, pre-tax profits were $30.3m, however, against a $21.1m loss a year previously.

The interim tax charge was $80.9m, EnQuest said, $34.1m of which related to the energy profits levy.

Said Bseisu: "The group’s growth strategy remains robust, with a focus on delivering a transformative UK acquisition.

"Given the prevailing tax regime, we are targeting UK portfolios with limited capital reinvestment programmes. Internationally, we are working on a number of growth opportunities in South East Asia."

As at 1230 BST, shares in EnQuest were down 2% at 12.02p.