Waldorf Production has outlined its goals for the coming financial year, including its UK M&A ambitions.
At the firm’s 4Q 2023 bond investors presentation, Waldorf Production chief financial officer Aaditya Chintalapati said: “Management focus continues to be on acquisitions in the UK North Sea.”
Mr Chintalapati shared that after being “fairly quiet” in the mergers and acquisitions market, Waldorf Production is in “multiple discussions” with its peers.
Through these deals, the firm aims to boost production that can “quickly slot into” its existing portfolio.
Waldorf Production shared earlier this year that it was planning to sell its stakes in a pair of CNOOC operated North Sea oilfields. However, it did say that it wanted to buy up larger UK projects soon.
The firm is looking to offload its 21.83% stake in the Scott asset and its 1.59% share of the Telford tieback.
The Waldorf CFO continued: “We are in multiple discussions ongoing with our peers at the moment to acquire producing barrels in the North Sea that we can quickly slot into the entities with the tax losses to then crystallise the nearly $700 million of nominal value that we have available.”
One gripe that the firm shared in its end-of-year reporting was related to the UK’s controversial Energy Profits Levy (EPL), or windfall tax.
The Aberdeen headquartered firm’s tax payments for 2023 saw a significant uplift when compared to 2022, “reflecting the estimated cost of the UK Energy Profits Levy,” the investor presentation stated.
Throughout the 2023 financial year, Waldorf paid $117.5 million in tax, a multimillion jump from the $90.5 million dished out in 2022.
Recently windfall tax has been hitting the headlines as the UK government is rumoured to extend the duration of the policy and the Labour Party has proposed a hike in the rate paid by oil and gas companies if it were to win the upcoming general election.
Trade body OEUK’s chief executive David Whitehouse said that “now is not the time for further tax increases” in response to the rumoured announcement in next week’s Spring Budget.
Mr Whitehouse said: “Ongoing investment in the North Sea in the UK’s oil and gas resources will play a vital role in supporting energy security and building the energy transition for decades to come.”
Despite this, Waldorf laid out plans to finance acquisitions in 2024. Mr Chintalapati told investors: “We have looked at various structures in terms of sort of profit sharing and sharing of tax crystallisation etc.
“To be able to fund acquisitions we would, depending on the size of the acquisition, our idea would be definitely to come back to the bond markets to to raise additional funds, to acquire new assets.”
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