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 declared yesterday that the Energy Profits Levy (EPL) has created “significant fiscal instability” since it was introduced last May and extended in November.

The company plans to bring the 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. The deal, which gave it stakes in three of the largest undeveloped fields in the North Sea, followed a political row over the field, sparked by former first minister Nicola Surgeon declaring she was against the development of the Cambo prospect.

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However, Ithaca warned that the EPL in its revised form “brings material and negative unintended consequences” for investment in the North Sea.

Gilad Myerson, executive chairman of Ithaca, said: “The UK oil and gas industry experienced significant fiscal instability with the introduction and subsequent revision of the Energy Profit Levy in 2022.

"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.”

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The intervention by Ithaca came shortly after fellow North Sea giant Harbour Energy declared the windfall tax had “all but wiped out” profits last year and had led it to cut staffing levels and investment.

Harbour chief executive Linda Z Cook said the levy has “disproportionately impacted the UK-focused independent oil and gas companies that are critical for domestic energy security”. She noted: “For Harbour, the UK’s largest oil and gas producer, it has all but wiped out our profit for the year. This has driven us to reduce our UK investment and staffing levels. Given the fiscal instability and outlook for investment in the country, it has also reinforced our strategic goal to grow and diversify internationally.”

Ithaca highlighted its concerns over the EPL as it reported a big rise in profits in 2022, which it heralded as a “transformational” year. The company, which was valued at $3 billion when it floated on the stock market in November, underlined the benefit from surging oil and gas prices as it made a profit before tax of $2.24 billion, up from $731.1m in 2021.

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The results show that it booked exceptional non-cash deferred tax charges of $766.5m in respect of the EPL.

Ithaca achieved record production of 71,400 barrels of oil equivalent per day in 2022, 26% up on the year before. However it revised down its production guidance to 68,000 to 74,000 boepd from 72,000 to 80,000, reflecting lower volumes in the first quarter because of the delayed start up the non-operated Pierce field, deferred volumes on Abigail, and operational issues on Captain. It also highlighted the impact of the EPL on capital programmes.

Ithaca said it its board did not propose a dividend for 2022. It paid an interim dividend of $133m in March of this year and is targeting a total dividend of $400m for the 2023.

Ithaca is now the second-largest oil and gas independent by reserves and resources on the UK Continental Shelf, further to the acquisitions of Siccar Point, Summit and Marubeni Oil and gas UK last year.

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