EnQuest has recorded another hefty annual loss thanks to the UK Government’s windfall tax on North Sea operators.
The London-based petroleum group reported a $30.8million loss in 2023, a drop on the $41.2million loss recorded the prior year, as it paid a $77.2million charge from the Energy Profits Levy.
Before tax, the company achieved a $231.8million profit last year, a $28.6million rise on 2022, even though its revenues tumbled by about a fifth to $1.49billion because of lower oil and gas prices.
Result: North Sea oil and gas producer EnQuest reported a $30.8million loss in 2023
Like other British oil and gas firms, EnQuest’s bottom line and investment plans have been heavily impacted by the EPL, which a 35 per cent tax on North Sea profits paid on top of a 40 per cent headline rate.
Then-Chancellor Rishi Sunak introduced the EPL in May 2022 after oil and gas prices soared in the wake of loosening Covid-related restrictions and Russia’s full-scale invasion of Ukraine.
While the levy has generated significant sums, the UK’s offshore energy industry blames it for discouraging investment in the North Sea.
Oil and gas output in the North Sea totalled approximately 1.26 million barrels of oil equivalent per day (boepd) in 2023, its lowest level since the mid-1970s, according to the North Sea Transition Authority (NSTA).
Average energy prices have also declined considerably over the past year amid a subdued economic outlook, mild winter conditions and increasing production in the United States.
EnQuest has partly reacted to the windfall tax by accelerating its debt repayments, fully paying off the outstanding $140million on a reserve-based lending facility in February.
Consequently, its total net debts have plunged by around $1.5billion from their peak to $409.6million as of last month.
‘Since we set our strategic priorities of ‘deliver, de-lever and grow’ at the end of 2018, we have made significant progress,’ noted its chief executive Amjad Bseisu.
He added that EnQuest was ‘consistently delivering against production, operational and cost targets, which in turn has enabled us to generate material free cash flows, even during periods of reduced commodity prices’.
Following the strong performance, the business is planning its first-ever investor capital return in the form of a $15million share buyback programme.
For the upcoming year, the group forecasts production will average between 41,000 and 45,000 boepd and operating expenditures of about $415million.
EnQuest shares were 5 per cent higher at 14.7p on late Thursday morning, although they have still more than halved since May 2022.
