Windfall tax hike fears sink oil and gas stocks

SHARES in North Sea oil and gas firms plunged amid fears over an extension to the windfall tax.

Ahead of Thursday’s autumn statement, Chancellor Jeremy Hunt is expected to hike the levy on energy firm profits to 35pc from 25pc in a bid to shore up the public finances through tax rises and spending cuts.

This would see the oil and gas sector’s effective tax rate on UK profits rise to 75pc from 65pc.

In a further blow, the extra windfall tax could be extended to 2028 from 2026. The Association of British Independent Exploration Companies (Brindex), which represents 20 UK oil and gas firms, has hit out against the plans and warned it would impact investment in new projects.

Michael Hewson of CMC Markets said: ‘ The likes of BP and Shell would probably be able to absorb better due to their global footprint, but would be increasingly problematic for the likes of Harbour Energy and EnQuest who make the bulk of their profits from domestic sources.’ Analysts at

Stifel added that the windfall tax is an issue of politics rather than policy and would not be removed even if prices fall further.

Shell fell 0.1pc, or 2p, to 2358p but BP bucked the trend in the sector, its shares edging up 0.4pc, or 2.1p, to 480.5p.

Harbour Energy, meanwhile, tumbled 9.6pc, or 36.5p, to 342.6p, Serica Energy plunged 8.6pc, or 27.5p, to 292p, EnQuest sank 9.4pc, or 2.75p, to 26.55p and Energean slid 3.1pc, or 48p, to 1481p.

Ithaca Energy, which floated at 250p last Wednesday in the biggest listing on the London Stock Exchange so far this year, fell 9.9pc, or 23p, to 210p

The FTSE 100 rose 0.92pc, or 67.13 points, to 7385.17 and the FTSE250 inched ahead by 0.03pc, or 6.04 points, to 19,622.25.

Informa was among the biggest risers on the blue-chip index after it cheered the return of events following the disruption caused by Covid. The publishing and exhibitions organiser said revenue rose 41pc in the ten months from January to October 2022.

Informa raised revenue forecasts for the year by £100m to between £ 2.3bn to £ 2.35bn. Profit is expected to be around £490m to £505m, above the £500m pencilled in by analysts. Shares rose 5.8pc, or 31.8p, to 584.4p.

Pharma stocks started the week on a strong footing following a host of positive updates.

AstraZeneca gained 2.6pc, or 270p, to 10868p after three of its drugs were recommended for regulatory approval by the European Union. Rival GSK gained 3.1pc, or 41.4p, to 1365p after the success of a study on its tuberculosis drug.

Cyber-security group Darktrace cheered the strong demand for one of its new products that uses artificial intelligence (AI) to curb cyber-attacks.

Prevent, which was rolled out in August, ‘has seen the longest list of customer opt-ins than for any product launch in its history’.

Shares, however, slipped 0.2pc, or 0.7p, to 395.2p.

Beazley, meanwhile, rose 4.2pc, or 25.5p, to 632p after analysts at RBC reiterated the bank’s ‘ outperform’ rating and raised the insurer’s target price to 775p from 675p. The broker said Beazley’s update last Friday demonstrated its ‘underwriting prowess in a quarter challenged by the impact of Hurricane Ian’.

And Carnival was up 5.3pc, or 40.6p, to 809.4p after UBS hiked the cruise firm’s target price to 1219p from 588p.

Kainos Group rose 3pc, or 43p, to 1481p after the IT firm hailed its ‘transition to a global business’ after a surge in revenue, staff hires and growing demand from customers. Revenue surged 26pc to £179.8m in the six months to September and profit rose 11pc to £27.5m.