NORTH SEA oil producer EnQuest warned that the government’s recent tax raid on oil profits will make some smaller projects in the region impossible, but said it is well-placed to snap up projects as the hike dents asset values.
EnQuest said it was “very disappointed by the recent unexpected UK Budget decision” to hike the oil profit levy from 20 to 32 per cent, adding that it “will render some small field investments uneconomic”.
But the firm posted a pre-tax profit of $169.4m (£104m), up from a pro-forma profit of $24.9m last year, and said that its developments still have significant potential.
Chief executive Amjad Bseisu said the tax increase might help the firm’s acquisition drive: “We can acquire assets at prices that are lower than they were just a few weeks ago,” he said on a conference call.
“We can look at an acquisition in the half a billion to a billion dollar range quite easily.”
EnQuest would consider assets put up for sale by oil majors such as BP in the North Sea, Bseisu said, but was wary of taking on high decommissioning costs at some of the more mature fields.
EnQuest also plans to spend $300m on drilling and exploration this year, according to its results statement.
Pro-forma production rose 55 per cent on last year to 21,000 barrels of oil per day, as EnQuest ramped up work on the North Sea assets of Petrofac and Lundin Petroleum that it acquired last year when it floated.
Reported revenues more than doubled to $583.5m during 2010.