EnQuest Plc (ENQ), a North Sea oil company, said it will invest more in the U.K. after Chancellor of the Exchequer George Osborne promised to guarantee tax breaks for dismantling platforms and developing new fields.
“We’re very pleased with the budget,” Chief Executive Officer Amjad Bseisu said in a Bloomberg television interview. “We’ll be looking to invest more in light of the changes.”
EnQuest plans to spend $1 billion on its projects this year, half of which will go to its Alma and Galia fields, which will allow the company to almost double production over the next two years. The company also said today it increased its stake in the West Don field, buying an additional 18.5 percent interest from JX Nippon Oil & Energy Corp. for $34 million.
EnQuest, formed in 2010 from a demerger of assets from Petrofac Ltd. and Lundin Petroleum AB, reported that gross profit more than doubled last year to $444.2 million. The company expects production of as much as 24,000 barrels of oil equivalent a day this year after 23,698 last year, with output rising to about 40,000 barrels in 2014.
The shares slipped 1.7 percent to 129.6 pence in London.
Osborne last week said he would guarantee tax relief for the dismantling of installations, making it easier to sell off assets to buyers who will spend more on them. U.K. law holds sellers responsible for decommissioning if the buyer can’t pay, leading sellers to demand letters of credit for the potential costs and adding to the expense of deals. Osborne has also promised to increase tax allowances on marginal fields after raising taxes on oil profits a year ago.
Bseisu said EnQuest is looking at opportunities for acquisitions in the U.K. and abroad, though he declined to give any specific targets.
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