LONDON (Reuters) -Harbour Energy, the largest British North Sea oil and gas producer, reported on Thursday a net profit of just $32 million for 2023, as the UK's windfall tax for energy companies wiped out most of its pretax profit while lower natural gas prices and output dented revenue.
Following the spike in energy prices in 2022, Britain imposed an energy profit levy (EPL) on oil and gas producers which raised the tax rate to 75%.
Harbour Energy (LON:HBR) said its profit before tax for 2023 totalled $597 million. That was down from $2.5 billion in 2022 when net profit was only $8 million, due largely to the $1.5 billion set aside for the EPL.
Shares in the company fell around 3% after the results on Thursday.
The EPL also pushed Harbour Energy into a loss in the first half of 2023, leading it to cut its headcount in Britain, scale back North Sea spending, and seek to diversify its operations overseas.
On Wednesday, Britain's finance minister Jeremy Hunt extended the EPL by another year to 2029.
Harbour posted $3.7 billion in revenue in 2023, lower than the $5.4 billion in 2022. It would have been $911 million higher if not for the company’s hedging losses, it said.
Its capital expenditure in 2023 was $969 million, which it said reflected higher international exploration activity, offset in part by the deferral of certain UK opportunities in response to the EPL.
In December, as part of its push to expand internationally, Harbour agreed to acquire Wintershall Dea's non-Russian oil and gas assets in an $11.2 billion share and cash deal with co-owners BASF and LetterOne, becoming one of the world's biggest independent producers.
In 2023, Harbour produced 186,000 barrels of oil equivalent per day (boe/d), down from 208,000 boe/d in 2022 but in line with its guidance for output between 185,000 and 195,000 boe/d.
It reiterated its production forecast for 2024 between 150,000 and 165,000 boe/d, due to a high level of planned shutdowns and the expected sale of its Vietnam business. It also projected capital expenditure of $1.2 billion in 2024.
The company proposed a final dividend of $100 million to shareholders.
It said in a January update that it generated $1 billion in free cash flow. It had also previously guided that 15% of its capital expenditure last year would be allocated outside the United Kingdom.
In April last year, Harbour partnered with BP (L:BP) to develop the Viking CCS (carbon capture and storage) project, with Harbour continuing as operator with a 60% interest, and BP acquiring a 40% non-operated share.