North Sea blow
Windfall tax blamed for United’s oil deal collapse
A North Sea deal has collapsed because of a failure to raise funds resulting from the government’s windfall tax on the oil industry.
United Oil & Gas had announced a deal in January to sell a licence containing the Maria discovery to Quattro Energy. It was worth a maximum consideration including contingent bonus payments of up to £5.7 million.
Estimates said the discovery in the Outer Moray Firth basin contained the equivalent of 17.7 million barrels of oil and gas.
However, United said regulatory and fiscal challenges had undermined investors’ confidence in progressing potential new field developments and it was unable to raise the required funds.
Westminster’s energy profit levy means a tax rate of up to 75% has been imposed on the profit from UK operations until March 2028.
United, a London-based oil and gas company focused on Egypt, the UK and Jamaica, was awarded the licence in December 2020 and will now let its interest in the licence expire.
Brian Larkin, its chief executive, said: “We had identified our interest in the Maria licence as non-core to our future strategy and on that basis undertook a farm-out process, which resulted in the agreement to sell to Quattro on the terms announced in January this year.
“Since signing this agreement with Quattro, we have sought to support their efforts to raise the funds required to complete this transaction and had regular interaction with the Quattro team and their advisors as they progressed their funding process.
“It is a disappointing outcome for both parties that, due to the challenging regulatory and fiscal backdrop in the North Sea, Quattro were unable to complete their funding process.”