The UK’s biggest oil and gas producer, Harbour Energy, said this morning that the review of its British organisation, which will see hundreds of jobs going, is on track to complete in the second half of this year.

As previously announced, this study is expected to result in a reduction of around 350 onshore positions.

The review is forecast to deliver annual savings of around £40million from 2024, following an estimated £12million one-off charge to be taken in Harbour's 2023 interim financial results.

The company last month confirmed plans to axe one fifth of its workforce, blaming the controversial windfall tax on North Sea oil and gas producers for deterring investment.

The majority of the jobs going are understood to be in Aberdeen.

Harbour has pointed to the chancellor’s money grab having squeezed cash flows and put off financial backers.

Response to new tax

In January, the firm said it was preparing to shift attention outside of the UK in response to the new levy. Then, in March, the company revealed that the new tax had virtually wiped out its profits for the last year. Profits after tax at were less than £7million on turnover of more than £4.5billion.

Chief executive Linda Cook said in today’s Q1 update that Harbour had delivered a strong first quarter.

She added: “Continuing to invest in our portfolio while actively managing our cost base has enabled us to further deleverage our balance sheet and return additional capital to shareholders.

“At the same time, we've built good momentum in our international development opportunities in Mexico and Indonesia which have the potential to add materially to our reserves and future production, and in our CCS (carbon capture and storage) projects, all of which will lead to future diversification of our business."

The company’s production in the first quarter averaged 202,000 barrels of oil equivalent per day – 192,000 of it from the North Sea – as against a daily total of 215,000 a year ago.

New wells coming on-stream, including at Tolmount, J-Area and Clair, partially offset natural decline.

Reduced UK activity in certain areas

Harbour said there was reduced UK activity in certain areas due to the windfall levy, including partner-cancelled programmes at Elgin Franklin and Beryl and rephasing of certain decommissioning activities.

But the firm reported significant progress on its UK CCS projects, with the Harbour-operated Viking and non-operated Acorn projects recognised as best placed to meet the UK Government's objectives for the Track 2 regulatory approval process.

It added: “Confirmation of Track 2 status would allow negotiation with the government over the terms of the economic licences to commence and the projects to move to front-end engineering design ahead of a potential final investment decision.”

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