THE Israeli-backed company which owns a majority stake in the controversial Cambo oilfield west of Shetland has warned the windfall tax on oil and gas industry profits threatens investment in the North Sea.
Ithaca Energy plans to bring the undeveloped Cambo field into production after securing a 70 per cent stake in the field following its $1.1 billion acquisition of Siccar Point Energy last year.
Siccar had planned to progress the field in partnership with Shell if plans were approved by the UK Government, but the field then found itself at the centre of protests after former first minister Nicola Sturgeon said during the COP26 climate change conference in Glasgow in 2021 that she would oppose its development.
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Ithaca, which also owns a 20% stake in the Rosebank field further to the Siccar deal, declared this morning that the Energy Profits Levy in its revised form “brings material and negative unintended consequences” for investment in the North Sea.
The levy was initially introduced by the UK Government in May last year in response to the extraordinary profits oil and gas companies were making after prices surged in the wake of Russia’s invasion of Ukraine. It was then extended in November.
Gila Myseron, executive chairman of Ithaca, said today: “The UK oil and gas industry experienced significant fiscal instability with the introduction and subsequent revision of the Energy Profit Levy in 2022.
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"In its revised form, the Energy Profit Levy, and the fiscal uncertainty it has created, brings material and negative unintended consequences for financing capacity, JV (joint venture) partner alignment, and the free cash flow generation required to support continued investment. We continue to look towards the UK government to create an economic environment that encourages investment in the UK North Sea.”
The comments came as Ithaca reported bumper financial results for 2022, which it heralded as a “transformational” year for the company.
Ithaca, now the second-largest oil and gas independent by reserves and resources on the UK Continental Shelf, underlined the benefit of higher prices as it reported a profit before tax of $2.24 billion, up from $731.1m in 2021, generating free cash flow of $1.34bn against $550.5m the previous time.
The results show that it booked exceptional non-cash Energy Profit Levy deferred tax charges of $766.5m.
Ithaca said it paid an interim dividend of $133m in March, and is targeting a total dividend of $400m for the 2023 financial year.
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