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North Sea oil stocks rise as UK says promises to axe windfall tax, depending on oil prices
Published Jun 09, 2023 10:19
© Reuters. North Sea oil stocks rise as UK says promises to axe windfall tax, depending on oil prices
Proactive Investors - Harbour Energy PLC (LON:HBR), Enquest PLC and Serica Energy PLC shares started Friday on the front foot, after the Treasury announced the North Sea windfall tax would be cut as planned in 2028.
North Sea firms would see taxes drop from 75% to 40% on the move, though any suspension of the levy would rely on oil and gas prices seeing sustained low levels, the Treasury said.
Shares in Harbour, the largest independent North Sea firm, climbed 3.6% to 255p following the announcement. Enquest (LON:ENQ) and Serica (LON:SQZ) also marked gains, rising 1.3% and 1.8% respectively.
Prices of FTSE 100 constituents Shell (LON:RDSa) and BP PLC (LON:BP.), which are far more diversified global energy companies, barely registered any reaction to the news, falling 0.4% and 0.2% respectively.
Oil and gas prices, which soared last year but have since dropped to pre-energy crisis levels, will have to fall to “historically normal levels” for two consecutive three-month periods for the change to be made in March 2028.
Taxes had been introduced to help fund government schemes to mitigate the effects of sky-high energy prices on households, while also preventing firms from unfairly benefiting.
North Sea companies have been able to gain tax breaks through reinvesting earnings, though the Treasury warned this had not been enough to prevent them from scaling back.
“This puts the long-term future of the UK’s domestic supply at risk, meaning we would be forced to import more from abroad at a time when reliable and affordable energy is a focus,” the government said.
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