EnQuest to acquire Harbour Energy’s business in Vietnam

EnQuest plans to buy Harbour Energy’s Vietnamese business in an $84million (£68million) deal as it seeks to expand operations outside the UK.

The London-based energy exploration business will acquire Harbour’s majority stake in the Chim Sáo and Dua production fields, which it plans to operate after completing the transaction.

Located about 400 kilometres south west of port city Vung Tau, the two fields’ net reserves total an estimated 7.5 million barrels of oil equivalent, while its contingent resources are about 4.9 million boe.

Net production from the fields is expected to average 5,300 boepd in 2025, of which approximately 73 per cent is high-quality oil.

The takeover, which EnQuest expects to finalise in the second quarter, will broaden its Southeast Asian presence beyond Malaysia, where it helps operate the PM8 and Seligi fields with state-owned oil and gas firm Petronas.

Although the acquisition has a headline value of $84million, EnQuest said it would pay only about $35million net of interim period cash flows.

Amjad Bseisu, chief executive of EnQuest, said: ‘This agreement underlines our commitment to growth, a disciplined approach to M&A, and deploying capital where we see the most favourable returns.’

EnQuest has been looking to expand its overseas reach since the UK Government brought in the Energy Profits Levy (EPL) in May 2022 after energy prices surged due partly to Russia’s invasion of Ukraine.

Under the EPL, oil and gas producers pay a 38 per cent surcharge on profits from extraction activities in the North Sea.

It means the overall tax rate on UK oil and gas production is 78 per cent, which is one of the world’s highest.

Companies were previously able to use an investment allowance that could help them save 91p of tax for every £1 they invested, but the new government abolished this tax break at the start of November.

Oil and gas companies have blamed the windfall tax for discouraging investment in domestic production, forcing firms to cut jobs, and wiping out profits.

Texas-based group Apache announced in November that it would shut down all operations in the North Sea by the end of 2029, saying the EPL had made production ‘uneconomic.’ 

Two months before, EnQuest’s Bseisu warned that the tax was ‘causing irreversible damage to an indigenous and strategically important UK industry.’

He called on the current government to institute a ‘progressive tax regime that recognises the maturity of the North Sea and re-establishes the UK as a globally competitive investment basin.’

EnQuest posted a $30.8million pre-tax loss in 2023, its second consecutive annual loss, after incurring a net EPL charge of $77.2million.

EnQuest shares were 2.7 per cent higher at 13.6p at around midday on Wednesday, although they have more than halved since the EPL was introduced.

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