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The Guardian - UK
The Guardian - UK
Business
Kalyeena Makortoff

Harbour Energy defends extra investor payout after 12-fold rise in profits

Harbour Energy’s Armada gas platform, off the Aberdeen coast
Harbour Energy’s Armada gas platform, off the Aberdeen coast. Photograph: Harbour Energy

The North Sea’s biggest oil and gas producer has become the latest big energy company to report huge earnings on the back of rising wholesale prices, with half-year profits rising 12-fold to $1.5bn (£1.3bn).

Harbour Energy said it would hand an extra $200m to shareholders on the back of the bumper revenues, which were boosted by the jump in fossil fuel prices following Russia’s invasion of Ukraine, as well as extra income linked with its merger with Premier Oil.

Its surging earnings and investor payouts will add to the debate in the UK about whether to increase the windfall tax on oil and gas producers, following outrage at the world’s five biggest oil companies’ eyewatering profits of nearly £50bn between April and June.

Meanwhile, households in Britain await the announcement on Friday of a new domestic energy price cap; it is forecast to increase to nearly £3,600 a year from October, while rising gas and electricity bills are forcing businesses across the UK to fold.

Linda Cook, chief executive of Harbour Energy
Linda Cook, chief executive of Harbour Energy. Photograph: Harbour Energy

Harbour said it was now preparing to pay another $100m in dividends to shareholders by October, and increase its share buyback programme from $200m to $300m.

The 12-fold rise in profits was linked to the fact pre-tax profits in the same period last year were weaker, at $120m, amid lower demand during the Covid pandemic.

Linda Cook, chief executive, said: “We delivered a strong first-half performance, realising value from past acquisitions, increased production efficiency and significant investment in our asset base.”

Wholesale energy prices, which were already at highs a year ago as the demand surged following the easing of pandemic restrictions, have been pushed even higher since Russia invaded Ukraine amid restrictions on oil imports and Vladimir Putin’s moves to limit gas flows to Europe.

That prompted calls for companies in the sector to be taxed on their outsized profits and, in May, Rishi Sunak, then chancellor and current Conservative leadership candidate, introduced a 25% energy profits levy on oil and gas producers.

Labour has called for the existing tax to be tightened by removing the option to claim tax relief on more than 90% of the levy if the money is reinvested.

However, Sunak’s rival in the Tory race, Liz Truss, who is widely tipped to become the next UK prime minister, has so far refused to consider extending the tax.

Harbour’s chief executive defended its shareholder payouts, saying: “In an environment of considerable fiscal, economic and geopolitical uncertainty, our strategy to build a global, diversified oil and gas company focused on safe and responsible operations, value creation and shareholder returns remains valid. We are financially strong and have continued to deleverage our balance sheet at pace.”

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