PARKMEAD Group, the energy company headed by North Sea veteran Tom Cross, has declared it has “obvious concerns” around increasing tax on energy production around Europe as it fell into the red in the six months ended December 31, 2022.

The company, which has assets in the North Sea, west of Shetland and onshore in Scotland and the Netherlands, reported a loss of £5.2 million, following a profit of £1.3m at the same stage last year. The loss came after a £12.7m impairment charge following the decommissioning of the Athena oilfield in the North Seam, and a windfall tax charge of £4m in the Netherlands. Shares in the company tumbled by 8.4 per cent to 35p.

The reversal was reported by Parkmead amid increasing concern within the energy sector that windfall taxes brought in to curb excessive profits will lead to a loss of crucial investment, as European countries strive to boost domestic energy production amid the fall-out from the war in Ukraine.

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Parkmead reported that revenue more than doubled to £11.1 million in the first half, boosted by “robust production through sustained period of high gas prices”.

Higher prices translated into a huge leap in cash generation at Parkmead. Net cash from operating activities surged by more than 400% to £8.86 million, while gross profit climbed to £9.8m, compared £3.8m for the same period in 2021.

However, the company noted that statutory gross profits were offset by a £4.8m tax charge arising principally from its Netherlands operations, as well as a £4m windfall tax charge that it said was expensed during the period but will be due for payment in May 2024.

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Mr Cross said: “I am pleased to report that strong operating performance has been achieved by Parkmead in the six-month period to 31 December 2022.

“In line with our strategy, Parkmead now benefits from stable revenue generated by clean, renewable sources, onshore Scotland. This is in addition to our high-quality onshore gas assets across the Netherlands.

“The Group has achieved an increase in revenue of over 140% on the prior year period, and outstanding growth in net cash generated from operating activities of over 400%.

“Parkmead's successful drilling campaign in the Netherlands has resulted in the LDS-01 well encountering new commercial gas volumes. This well has been swiftly tied into production infrastructure, with first gas due imminently.

“We continue to maintain strict financial discipline across all our existing energy projects. This is in addition to the ongoing evaluation of acquisition opportunities that will complement the group and maximise shareholder value."

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Oil and gas companies have been heavily criticised for making bumper profits at a time when householders have faced crippling energy bills.

The UK Government introduced the energy profits levy to curb extraordinary profits May last year, before extending the additional tax in November. But the levy has met with increasing disquiet by oil and gas producers, which claim it is undermining much-needed investment in crucial North Sea projects at a time when the UK is striving to increase domestic energy supplies.

North Sea giant Ithaca Energy, which is planning to bring the controversial Cambo oilfield west of Shetland into production, said on Thursday that the levy had brought “significant fiscal instability” to the industry. Ithaca said the EPL in its revised form, which increased the headline tax rate on oil and gas profits to 75% in November, “brings material and negative unintended consequences” for investment in the North Sea.

Its comments came shortly after fellow North Sea giant Harbour Energy reported earlier this month that the windfall tax had “all but wiped out” its profits last year and had led it to cut staffing levels and investment. Harbour chief Linda Z Cook said the levy has “disproportionately impacted the UK-focused independent oil and gas companies that are critical for domestic energy security.”

Parkmead told the city yesterday: “There are obvious concerns in the upstream industry about the high and increasing levels of taxation on primary energy production across Europe, and how that may impact future investment. Despite this higher taxation, Parkmead has the benefit of having built multiple opportunities to create additional value, such as those across the Netherlands, as well as the progression of our Skerryvore project in the UK Central North Sea.”

The company added: “Whilst frustrating, we understand that this windfall tax will aid the Netherlands population in accessing lower-cost, low-carbon energy - an ultimate goal for Parkmead, and why we aim to increase our domestic natural gas output in the region.”

Parkmead noted meanwhile that it had generated record revenue of £343,000 from the Kempstone Hill windfarm it acquired for £3.3m in February 2022.