Harbour Energy (LON: HBR) has confirmed it is cutting 350 onshore jobs, claiming the windfall tax is the reason behind the decision.
“We have confirmed that we expect to have around 350 fewer onshore jobs in our UK business unit, from a baseline of approximately 1,200,” the North Sea’s largest producer said.
The majority of Harbour‘s onshore UK staff are based in Aberdeen, however, when asked for comment the firm did not confirm how many roles in the Granite City will be affected.
In January the London-listed company announced that it was planning to axe hundreds of jobs, however, the firm has only recently given an exact figure.
Analysts have said that Harbour’s “bloated” staff levels is a major contributing factor to the cuts, rather than just the windfall tax.
It has been previously reported that pre-tax, the firm booked $2.4bn of profits, but a one-off windfall tax payment, taking into account future sums for the tax through to 2028, took earnings after tax to just $8m.
The firm said: “When we announced the review in January, we said that as a result of the energy profits levy, which results in an effective tax rate of 75% in the UK regardless of the level of oil and gas prices in the market or realised, we have had to reassess our future activity level in the UK.
“At our full year results in March, we explained this would ‘lead to a significant reduction in our UK workforce’.”
Harbour confirmed last month it expects to make $40m annual savings from the job cuts.
Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber of Commerce, said: “Our thoughts are with the 350 people who will be out of work because their industry has been used as a political football.
“Despite repeated warnings about the damage a windfall tax would cause, the UK Government, cheered on by the opposition, chose to take a gamble on the North Sea.
“Today it is the people and companies of Aberdeen that are paying the price.
“The chancellor must now wake up and recognise the corrosive impact the windfall tax has had on jobs and investment and urgently reform the levy to introduce a price floor.
“Failure to act now will result in today’s announcement becoming the tip of a terrifying iceberg for the north-east of Scotland.”
‘Not a shock from Harbour’
Ashley Kelty, an analyst at investment bank Panmure Gordon has previously said that the courts are “not a shock from Harbour”
The analyst adds: “I am not sure many other operators will look to slash jobs – Harbour were quite bloated staff wise and this will help make it easier to get rid of the last remaining Premier Oil staff they acquired.”
This is referring to Harbour being formed through the reverse takeover of Premier Oil by Chrysaor in 2020.
Wider impact across the firm
The affected roles are limited to the firm’s onshore workforce and it has opened a voluntary redundancy scheme.
International, UK-based corporate and offshore roles are expected to see a “significantly lower” impact.
The firm released a statement, saying: “We are working hard to mitigate the impact of this reduction, by for example, a recruitment freeze (excepting safety critical and business critical roles) and opening a voluntary redundancy scheme.
“These figures do not include UK-based corporate and international roles, which are still being reviewed. Nor do they include our offshore organisation, where we expect the impact to be significantly lower.
“We are very conscious of the impact of this news on our people, and we are carrying out the review fairly and with consideration for everyone who is affected.”
This comes as the UK oil and gas company has announced plans to back out of the Bressay oilfield, citing the controversial windfall tax as the reason behind this decision as well.
Harbour Energy was recently awarded a license to electrify the Britiania and one other platform in the UK North Sea, following two successful £405,000 INTOG leasing round bids.