IGas to Pay GBP2 Million in 2022 Under New UK Windfall Tax -- Energy Comment

By Jaime Llinares Taboada

IGas Energy PLC on Wednesday forecast that it will pay around 2 million pounds ($2.4 million) in respect of 2022 under the new U.K. Energy Profits Levy. Here's what the London-listed onshore hydrocarbon producer had to say:

On current performance:

"We continue to anticipate net production of c.2,000 boepd for 2022. As at May 31 2022, cash balances were GBP3.2 million and net debt was GBP10.3 million, a reduction of GBP1.9 million since year end."

"Operating cash flow before working capital movements expected to be c.GBP21 million in 2022."

"Operating costs are now forecast to be c. $38.8/bbl driven primarily by increased energy costs and general price increases on equipment. However, positively, given IGas is a net exporter of electricity, there is a forecast net benefit to IGas of GBP1.4 million, equivalent to $2.5/boe."

On the U.K. Energy Profits Levy:

"The government announced on May 26 2022 that it would introduce an Energy Profits Levy on U.K. production. Whilst we are awaiting the draft legislation, based on government announcements we believe that IGas' ring-fence profits will be subject to the Levy."

"The Levy takes effect from May 26 2022, and based on current forecasts we estimate a payment under the Levy of c.GBP2 million in respect of 2022, taking into account our current capital expenditure plans. Given this new Levy is part of a package that includes significant investment incentives, we will evaluate additional projects that could be brought forward to offset the impact, once the details of the legislation are agreed."

"We have written to HM Treasury for clarification on the definition of qualifying expenditure for investment relief for example, in geothermal, which currently sits outside of the U.K. ring-fence tax regime."

Write to Jaime Llinares Taboada at [e-mail]; @JaimeLlinaresT

(END) Dow Jones Newswires

June 15, 2022 03:47 ET (07:47 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.