Serica Energy plc today urged policy makers to encourage fiscal stability for the oil and gas industry as the company looks to tax savings for its North Sea operations.
TAX SAVING
The company made the comments today in its financial and production report for May 2022, following the Government’s Energy Profits Levy announced last month.
“This new levy is part of a package that includes significant investment incentives designed to encourage companies like Serica to continue to reinvest profits.”
“Serica already has an ongoing investment programme including the LWIV campaign and the North Eigg exploration well in 2022.
“Based on our current understanding of the levy, this programme will qualify to benefit from these incentives with each £1 invested by Serica offering an overall tax saving of up to 91.25 pence,” said the company in a statement.
“Our planned 2022 expenditure on the North Eigg well and the LWIV [light well intervention] campaign is around £60 million which we expect to be eligible towards this tax saving.
“This will offset a large element of the Energy Profits Levy that would otherwise be payable on Serica’s profits this year.”
The company is also evaluating additional projects designed to increase the productivity of the Bruce hub.
VOLATILITY
Chief executive Mitch Flegg said that although Serica had financial strength the industry operated “within unusually long investment horizons against a backdrop of often highly volatile commodity markets and business cycles”.
“We therefore encourage policy makers to consider the importance of fiscal stability in enabling Government and industry to meet the mutually set objectives of sustaining investment in the UKCS at a level capable of ensuring security of oil and gas supply in volatile markets and delivering energy transition targets.”