North Sea exploration pioneer Deltic Energy has parted company with chief executive Graham Swindells as it launches a cost cutting drive amid oil and gas industry fears about the Government's plans for a windfall tax hike.
The company said Mr Swindells had stepped down as chief executive with immediate effect.
Mr Swindells has been replaced by chief operating officer Andrew Nunn, who praised his former boss for leading Deltic through some of the toughest and most volatile times he had experienced in the industry.
Deltic's shares plunged around 20% following the announcement of Mr Swindells’ departure, to new lows.
The shares have fallen by almost 95% over the last two years.
The fall reflects a big change in the outlook for North Sea firms since the windfall tax was introduced in 2022.
READ MORE: SNP Government green jobs failure seen in English city's success
The former Conservative Government imposed the tax after North Sea firms enjoyed a huge boost to their profitability from the surge in oil and gas prices triggered by Russia’s war on Ukraine.
Deltic was riding high in the months before the tax took effect.
The company shot to prominence after making the bumper Pensacola find on a North Sea licence that it persuaded Shell to buy into.
The success highlighted the role played by minnows such as Deltic in raising awareness of the remaining exploration potential in the mature North Sea.
Deltic used new technology to help identify prospects that had been missed by others.
However, the company was left facing huge challenges as interest in North Sea exploration and development activity evaporated amid tax increases and the prospect of more to come.
READ MORE: 'Mad' North Sea tax hike to cost UK billions warns oil industry big gun
In June Deltic withdrew from the Pensacola licence after it was unable to raise the funds needed for its share of the work on the prospect despite an “exhaustive effort”.
It cited “deteriorating sentiment towards the oil and gas industry as a result of ongoing fiscal volatility and negative political rhetoric in the run-up to the July election”.
The Labour Government has said it will increase the windfall tax rate by three percentage points and will cut related allowances. Chancellor Rachel Reeves will announce her Budget on October 30.
The rate of the windfall tax was increased from 25% to 35% in November 2022. That took the headline tax rate payable by North Sea firms to 75%.
On Monday Aberdeen and Grampian Chamber of Commerce said confidence had fallen to a record low in the North Sea.
READ MORE: 35,000 jobs at risk amid fears of 'hard stop' to North Sea investment
Mr Nunn said Deltic’s small team had delivered what would have been, at any other time in the industry’s history, a company-making success with the Pensacola discovery.
Deltic still hopes to be able to make money in the North Sea. The company is drilling a well on the Selene prospect, which it encouraged Shell and Korean-owned Dana Petroleum to invest in.
However, Mr Nunn said Deltic planned to look further afield to find value for shareholders.
He noted: “We anticipate shortly announcing a series of measures to reduce the Company’s overheads.”
Deltic shares sold for 4.25p yesterday, compared with around 80p in September 2022.
Mr Swindells entered the oil and gas industry after studying accountancy at the University of Glasgow. He became finance director of Deltic in 2013 and was promoted to the chief executive's post in 2018.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel