The UK’s biggest oil and gas producer Harbor Energy said this morning that the overhaul of its UK organisation, which will result in hundreds of jobs, is on track to be completed in the second half of this year .
As previously announced, this study is expected to result in a reduction of approximately 350 positions on the ground.
The overhaul is expected to deliver annual savings of around £40m from 2024, after an estimated one-off charge of £12m to be charged to Harbour’s interim financial results in 2023.
The company last month confirmed plans to cut a fifth of its workforce, blaming the controversial windfall tax on North Sea oil and gas producers for deterring investment.
It is understood that most of the jobs there are in Aberdeen.
Harbor has pointed out that the chancellor’s money grab has reduced cash flows and turned away financial backers.
Response to the new tax
In January, the company said it was preparing to shift focus away from the UK in response to the new rate. Then in March, the company revealed that the new tax had virtually wiped out its profits for the past year. Profit after tax was less than £7m on a turnover of more than £4.5bn.
Chief executive Linda Cook said in today’s first quarter update that Harbor had had a strong first quarter.
He added: “Continuing to invest in our portfolio while actively managing our cost base has allowed us to further deleverage our balance sheet and return additional capital to shareholders.
“At the same time, we have built good momentum in our international development opportunities in Mexico and Indonesia that have the potential to add materially to our reserves and future production, and in our CCS (carbon capture and storage) projects ), all of which will lead to future diversification of our business.”
The company’s production in the first quarter averaged 202,000 barrels of oil equivalent per day, 192,000 of which from the North Sea, compared with a daily total of 215,000 a year ago.
New wells now in operation, such as Tolmount, J-Area and Clair, partially offset the natural decline.
Reduced UK activity in certain areas
Harbor said there was a reduction in UK activity in certain areas due to the unexpected rate, including programs canceled by partners at Elgin Franklin and Beryl and the resumption of certain decommissioning activities.
But the company reported significant progress on its UK CCS projects, with the non-Harbour-operated Viking and Acorn projects recognized as best meeting UK government targets by the regulatory approval process for track 2.
He added: “Confirmation of the status of Runway 2 would allow negotiations with the government on the terms of the economic licenses to begin and the projects to move into front-end engineering design before a possible final investment decision “.
Read the latest issue of OGV Energy magazine HERE
Published: 05-10-2023
