Exciting Moves: Harbour Energy Eyes U.S. Listing as it Exits the North Sea
A significant shift is occurring in the North Sea oil sector. Leading British producer Harbour Energy is attempting to sell its stakes in several North Sea oil fields. Simultaneously, the company is reviving its efforts to list in the United States as industry players respond to impending tax increases in the UK.
The Labour Party government, which came into power in July, has proposed tax hikes on the oil and gas sector to fund renewable energy projects. Chancellor Rachel Reeves is set to announce these changes on October 30. The government is also working on new environmental guidelines for oil and gas projects, potentially creating more challenges for investments in the North Sea, which has seen a 75% decline in production since its late-1990s peak.
Harbour Energy aims to acquire a company listed in the US, facilitating its listing there and potentially allowing it to relocate its headquarters. This plan, temporarily on hold last year due to Harbour's $11 billion acquisition of Wintershall Dea's non-Russian assets, has been renewed following the deal's completion last month.
The company has initiated the sale of its stakes in the Armada, Everest, Lomond, Catcher, and Tolmount fields to reduce its presence in the North Sea. However, Harbour declined to comment on the sale process, emphasizing its focus on integrating Wintershall Dea’s assets.
The UK North Sea sector has been under pressure due to tax changes. The previous Conservative government introduced a 25% Energy Profits Levy in May 2022, which was later increased to 35% in November 2022 and extended to March 2024. The current Labour government plans to raise this tax from the existing 35% to 38% effective November 1, resulting in a cumulative tax rate of 78% on oil and gas activities, among the highest globally. This tax rate is now expected to continue through March 2030, and the investment allowance permitting tax relief on reinvested capital will be removed.
Industry representatives have expressed concerns about the investment climate in the North Sea. Serica Energy's Chairman David Latin stated that, without a reasonable fiscal regime, the UK North Sea is not attractive for investment. The Treasury highlighted the government’s commitment to making the UK a clean energy leader, expecting the oil and gas sector to contribute to this transition.
TotalEnergies CEO Patrick Pouyanne announced earlier this month that they are halting exploration activities in the North Sea, citing the challenging political environment. Similarly, Neo Energy and Japan Petroleum Exploration (Japex) reported that they are slowing their investments and initiating sale processes for their interests in the North Sea.
Andrew Nunn, CEO of Deltic Energy, which announced plans to cut spending on Monday, conveyed that investors advised against investing in the UK. The industry’s response to tax changes and environmental policies indicates a broader retreat from the North Sea as companies seek more favorable conditions.