EnQuest slams windfall tax as Aberdeen oil and gas jobs lost

The Herald Scotland

27-05-2025

In an operations update, the company told stock market investors: 'We remain focused on delivering a material UK transaction in the short term,' adding that it is in 'ongoing discussions with multiple UK counter-parties'.
The company released the update weeks after abandoning a bid to acquire North Sea-focused Serica Energy, which has a stock market capitalisation of £565m.
EnQuest has seen its valuation fall to £212m following a drop of around a third in the price of the company's shares since March amid the volatility triggered by Donald Trump's tariff threats.
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Against that backdrop, the company said the windfall Energy Profits Levy was an increasingly unfair burden on firms which could have disastrous unintended consequences.
"The recent stepdown in commodity prices has further amplified calls for the UK government to remove the Energy Profits Levy and return the North Sea to a position of global competitiveness,' said chief executive Amjad Bseisu in the update.
'The status quo, which sees the UK as the only country levying a windfall tax on homegrown energy producers, where no windfall profits exist, is resulting in irreversible damage to this strategic national industry and is driving job losses across the sector.'
Earlier this month one of the biggest North Sea producers, Harbour Energy, announced plans to shed 250 jobs citing the continued challenging domestic fiscal and regulatory environment.
In the update, EnQuest said it had launched a drive to cut costs to boost efficiency 'commensurate with a low commodity price environment'.
The company did not elaborate on the implications for jobs in the North Sea operations it runs from Aberdeen. It has been approached for comment.
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All the same, the update made clear that EnQuest still sees plenty of potential in the UK North Sea.
'We are resolute in our belief that our relative advantages, both operational and fiscal, see us ideally placed as a North Sea consolidator," said Mr Bseisu in the update.
EnQuest became a significant force in the area after investing in assets it acquired amid tough times in the industry from firms that appeared to have lost interest in them, such as BP.
EnQuest started production from the Kraken field off Shetland in 2017 (Image: EnQuest)
The company's directors appear confident that the strategy makes sense amid the current downturn. This may create opportunities to acquire assets on attractive terms.
Mr Bseisu's comment highlights the fact that EnQuest has accumulated historic losses that it can use to reduce the tax bills it will have to pay on the profits generated by its North Sea production operations.
EnQuest incurred the losses amid moves to increase production from the assets it acquired. This has involved it drilling additional wells to help boost the recovery of reserves from existing fields and developing new ones such as Kraken.
The company has continued with the strategy since the windfall tax was first introduced by the former Conservative Government in 2022.
Mr Bseisu noted that EnQuest recently increased output from the Magnus field north east of Shetland to the highest level since 2022. The success reflected 'strong reservoir management and good infill drilling results'. EnQuest expects to start production from a further infill well on Magnus next month.
The company acquired Magnus and related assets from BP in deals worth $385m in total in 2018, amid the slump in the area that started after oil prices plunged in 2016 as growth in supplies ran ahead of demand.
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EnQuest acquired control of the undeveloped Bressay oil field east of Shetland from Equinor in July 2020 for an initial £2m, following the plunge in oil prices caused by the pandemic.
In January EnQuest acquired Harbour Energy's Vietnam business in an $84m (£62m) deal. It has long had a presence in Malaysia.
The company said it sees 'significant upside across its existing Asia portfolio, and is in advanced discussions around a further new country entry'.
EnQuest made $94m profit after tax in 2024 on sales of $1.2bn.
When EnQuest and Serica ended takeover talks early this month the companies said that market volatility had made it impossible to agree the terms concerned.
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Serica announced in March that it was in talks with EnQuest regarding a deal that would have created a company with increased scale, unlocked significant synergies and created a stronger platform for further growth.
It was expected then that EnQuest would make an all-share offer for Serica.