Enquest slips into the red as windfall tax continues to weigh on North Sea companies

Enquest slipped into the red as the windfall tax continues to weigh on operators in the North Sea.

The energy group posted losses of £16.8m in the six months to June after posting a profit of £162.1m in the same period last year.

Like many of its peers, the oil and gas producer was hit by the random tax that Rishi Sunak introduced as chancellor last year after global energy prices skyrocketed.

Under pressure: Enquest posted losses of £16.8m in the six months to June after posting a profit of £162.1m in the same period last year

The Energy Profits Levy imposed a 25 percent surtax on profits and was increased to 35 percent by Jeremy Hunt after he took office at the Treasury Department.

Adding to the heavy burdens North Sea operators are already facing, the levy imposes an effective corporate tax rate on the industry of 75 per cent and is set to remain in place until 2028 even as energy bills fall.

Enquest said it paid £61m in tax on the levy in the six months to June, causing Aim-listed shares to fall 12.1% yesterday.

Chief Executive Amjad Bseisu said: “The UK oil and gas sector is facing significant challenges and a loss of competitiveness due to uncertainty resulting from adverse tax regime changes.”

“We believe timely legislative reform is needed to restore confidence in the UK oil and gas sector, protect jobs and ensure both energy security and decarbonisation.”

Other North Sea operators also criticized the tax.

Last month, Ithaca Energy chiefs said this had already resulted in the “postponement and cancellation of certain projects for 2023 and 2024.”

Earlier this year, Harbor Energy said its annual profits were “all but wiped out” by the tax.

Francesca Bell, an analyst at lobby group Offshore Energies UK, said Enquest’s latest findings were “another worrying example of the tax’s negative impact on UK energy production”.