The North Sea player raises concerns about the windfall tax as it falls into the red
The company, which has assets in the North Sea, west of Shetland and onshore in Scotland and the Netherlands, reported a loss of £5.2m. The loss came after £12.7m in impairment after the closure the Athena oil field in the North Seam and a £4m windfall tax charge in the Netherlands. The company’s shares fell 8.4 percent to 35 pence.
The reversal was reported by Parkmead amid growing concerns in the energy sector that unexpected taxes levied to curb excessive profits will result in a loss of key investment as European countries scramble to scale down domestic energy production amid the aftermath of the war in the US boost Ukraine.
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Parkmead reported that first-half sales more than doubled to £11.1m, boosted by “robust production amid persistently high gas prices”.
Higher prices led to a huge increase in cash generation at Parkmead. Net cash from operations increased by more than 400% to £8.86m while gross profit rose to £9.8m compared to £3.8m for the same period in 2021.
However, the company found that statutory gross profits will be offset by a $4.8 million tax charge in 2024.
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Mr Cross said: “I am pleased to report that Parkmead has delivered a strong operational performance for the six months ended December 31, 2022.
“In line with our strategy, Parkmead now benefits from stable revenues from clean, renewable sources onshore in Scotland. This is in addition to our high quality onshore gas assets in the Netherlands.
“The Group has achieved an increase in revenue of over 140% over the same period last year and outstanding growth in net cash from operations of over 400%.
“Parkmead’s successful drilling campaign in the Netherlands has resulted in well LDS-01 encountering new commercial gas volumes. This well was quickly integrated into the production infrastructure with first gas imminent.
“We continue to maintain strict financial discipline on all of our existing energy projects. This is in addition to the ongoing evaluation of acquisition opportunities that will complement the group and maximize shareholder value.”
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Oil and gas companies have been heavily criticized for posting record profits at a time when households are grappling with crippling energy bills.
The UK government introduced the energy profits levy in May last year to curb excess profits before extending the additional tax in November. But the levy is provoking increasing disquiet from oil and gas producers, who claim it is undermining much-needed investment in crucial North Sea projects at a time when the UK is keen to increase domestic energy supplies.
North Sea giant Ithaca Energy, which plans to bring the controversial Cambo oil field west of Shetland into production, said Thursday the levy has brought “significant fiscal instability” to the industry. Ithaca said the EPL, in its revised form, which increased the overall tax rate on oil and gas profits to 75% in November, has “material and negative unintended consequences” for investments in the North Sea.
His comments came shortly after North Sea giant Harbor Energy reported earlier this month that the windfall tax had “all but wiped out” its profits over the past year and led to staff and investment cuts. Port chief Linda Z Cook said the levy had “disproportionately hit UK-centric independent oil and gas companies, which are vital to domestic energy security”.
Parkmead told the city yesterday: “There are obvious concerns in the upstream industry about the high and increasing taxation levels on primary energy production across Europe and how this could affect future investment. Despite this higher level of taxation, Parkmead has the benefit of having created multiple value creation opportunities such as in the Netherlands and the progress of our Skerryvore project in the UK central North Sea.”
The company added: “While frustrating, we understand that this windfall tax will help the Dutch people access lower-cost, low-carbon energy – an ultimate goal for Parkmead, and why we are aiming to expand our domestic natural gas production in the region.” to increase .”
Parkmead, meanwhile, found it had made record sales of £343,000 from the Kempstone Hill wind farm, which it had acquired in February 2022 for £3.3m.
https://www.heraldscotland.com/business_hq/23426713.north-sea-player-raises-windfall-tax-concern-falls-red/?ref=rss The North Sea player raises concerns about the windfall tax as it falls into the red