Uncertain future: Deltic Energy has lashed out at the UK’s ‘hostile political environment’
Deltic Energy has lashed out at the UK’s ‘hostile political environment’ as it warned it may have to pull out of a major North Sea project.
Shares in the Aim-listed exploration company plunged by 47 per cent, or 18.1p, to 20.4p on the update, which related to Deltic’s 30 per cent stake in the Pensacola well, which is majority-owned and operated by Shell.
It is the latest North Sea firm to sound the alarm over the Government’s windfall tax on UK oil and gas producers. The levy means that they are paying a tax rate of 75 per cent.
Labour would increase it to 78 per cent while also removing tax breaks for investment.
Deltic chief executive Graham Swindells blamed the ‘struggle to find a way forward on a project like Pensacola – which is one of the largest discoveries in the North Sea in recent decades – on politicians using the industry as a ‘political football’.
The company blamed ‘tinkering’ with the levy as well as ‘recent rhetoric emanating from the Labour Party’ for creating uncertainty that was hampering its efforts to find a partner on the project.
It also believes investor sentiment means that it will not be able to raise the £15million it needs for costs via traditional equity investor.
It described this as ‘frustrating’, given a recent assessment valuing Deltic’s stake in the project at £160million.
Deltic said if it is unable to find a funding solution by the end of this month it would have to withdraw from the project.
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