One of the North Sea’s largest gas producers Neptune Energy has paid $1bn in dividends to its owners, prompting renewed calls for a windfall tax on the sector.

Private-equity backed Neptune Energy, which provides about 12 per cent of the UK’s gas, said an increase in production and higher commodity prices had increased operating cash flow to $2bn in the year to December 31 2021, up from $880mn in 2020. This enabled it to pay out a total of $1bn in dividends this year, up from $800mn announced in December.

Harbour Energy, the biggest oil and gas producer in the North Sea, also reported buoyant profits on Thursday, and confirmed a $200mn payout to shareholders.

The company, which is listed on the FTSE 250, said it would generate up to $1.7bn in spare cash this year, paving the way for more acquisitions and larger dividends if prices average $100 a barrel of oil and 200p per therm of gas. It has asked shareholders to allow it to buy back 15 per cent of its shares and says it may pay off its debt this year.

Oil prices surged to more than $130 a barrel after Russia’s invasion of Ukraine, but have since fallen back to just over $100, while the price of gas hit 227p a therm last week as fears of shortages of supplies grew.

The bumper dividends prompted renewed calls for a windfall tax on North Sea oil and gas producers to help households and energy-intensive industries cope with higher fuel bills.

In April, average household energy bills will rise to almost £2,000, an increase of almost £700 a year, driven primarily by high gas prices.

Ed Miliband, the Labour party’s shadow climate change secretary, said the “figures are yet more evidence of soaring profits in the oil and gas sector as families are hit by massive rises in energy bills”. 

“When companies are spending huge sums on share buybacks and producers themselves are saying they have more cash than we know what to do with, the case for action is clear.”

Labour is calling for a one-off windfall tax to give households £600 off their energy bills.

Harbour Energy reported net profits of $101mn in 2021, compared with a $778mn loss in 2020 when prices slumped because of reduced demand during the pandemic. Although it had net debt of $2.3bn at the end of last year, it said it had the potential to be debt free in 2023.

Its total oil and gas output was the equivalent of 175,000 barrels of oil a day in 2021, mostly from the UK, and this is expected to grow to average more than 200,000 b/d this year.

Neptune is based in the UK but operates in seven countries including the Netherlands, Egypt, Indonesia and Algeria. It was founded in 2015 by Sam Laidlaw, a former Centrica chief executive, with backing from private equity firms Carlyle and CVC and sovereign wealth fund China Investment Corporation, which has the largest stake at 49 per cent.

The company said demand for gas and oil surged last year, with prices it received per barrel rising from $46 to $66 in the calendar year. 

Production rose from 144,000 barrels of oil equivalent a day in 2020 to 148,000 a day in 2021 as it brought forward three new gas projects in Norway and Indonesia.



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