A North Sea player has unveiled a raft of job cuts due to fiscal uncertainty in the UK over the windfall tax.
Hartshead Resources (ASX: HHR), which is developing the Anning and Sommerville gas hub in the Southern North Sea, said it has had to make a “material cut in head count” in order to maintain a strong cash position “during this period of delay and uncertainty”.
Last month, the firm specifically cited policies from the Labour party for throwing the development into uncertainty, as the party plans to hike and extend the tax and slash investment allowances.
CEO Chris Lewis said: “While it is regrettable that we have had to let so many from the project team go, we recognise the importance of preserving our cash position as much as possible until we have the clarity on policy to enable the project to once again move forward.”
Hartshead has been asked to confirm the exact number of job cuts it has made over the North Sea windfall tax.
Windfall tax job cuts
The Australia-listed company has been developing licence P2607 which contains the Anning and Somerville fields, as well as the Hodgkin and Lovelace plays.
Hartshead believes the permit to hold 2P reserves of 301.5 billion cubic feet of gas, equivalent to around 52 million barrels of oil.
Last year the company farmed out 60% and operatorship of the licence to Viaro Energy (parent of RockRose Energy) in a deal worth £105m.
It went on, in January, to announce a £415m “funding backstop” for the project, but an announcement last month sent alarm bells ringing.
As the opposition Labour party leads polls going into the general election, Hartshead said its plan to hike the tax and cut investment allowances had thrown the project into uncertainty.
At the time, Mr Lewis said: “The danger is that these proposals will cause a flight of capital to other jurisdictions, decimate the skills and supply chain required for the UK to lead the energy transition.”
Now, Hartshead said “the situation still remains unclear” and it is working to find means of project finance to reduce the funding requirement needed by Hartshead for the project.
However the company has pointed to a recent positive sign in strengthened gas prices, and said it remains committed to developing the project.
Mr Lewis added: “The Joint Venture continue to work to move our gas development project forward, looking at innovative funding arrangements to potentially reduce up front CAPEX. Discussions with policy makers and other stakeholders have been encouraging and I anticipate that a pragmatic solution exists to enable the continuation of the oil and gas industry in the UK.
“I would like to thank RockRose for their continued support in the JV and collaboration on moving the project forward.”
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