Hartshead Advances UK Gas Projects Amid New Energy Levy and License Wins
Hartshead Resources reports a robust December quarter with strategic progress on UK gas developments, fiscal clarity from government levy changes, and the acquisition of new licenses boosting its resource base.
- UK Government raises Energy Profits Levy to 38%, extends to 2030
- Hartshead secures six new licenses adding 1,187 Bcf of contingent and prospective resources
- Net reserves and resources now total 1.5 Tcf
- Joint venture discussions focus on advancing Anning and Somerville gas field development
- Strong financial position with over A$20 million in net current assets
Fiscal Policy Update and Its Impact
In its December 2024 quarterly report, Hartshead Resources NL highlighted significant developments in the UK Southern Gas Basin, notably the UK Government's revision of the Energy Profits Levy (EPL). The Autumn Budget raised the EPL rate by 3 percentage points to 38% and extended its application until March 2030. While the 29% Investment Allowance was removed, the retention of the 100% First Year Capital Allowance effectively reduces the overall relief rate to 84.25%, down from 91.4%. This fiscal clarity provides a firmer foundation for project economics and investment decisions.
Operational Progress on Anning and Somerville
Hartshead is actively advancing the Anning and Somerville gas field developments within Licence P2607. The company has engaged closely with the North Sea Transition Authority (NSTA) and joint venture partners to refine project economics, export route options, and operational timelines. Notably, a reassessment of gas export routes identified a previously unavailable option due to recent changes in asset ownership, potentially enhancing project viability. The company is preparing to submit a revised Field Development Plan, aiming to progress towards a Final Investment Decision.
Expansion Through New Licenses
During the quarter, Hartshead secured six new oil and gas licenses across ten offshore blocks awarded in the 33rd UK Licensing Round. These licenses contain discovered hydrocarbons and offer a mix of redevelopment, development, and appraisal opportunities. The new contingent and prospective resources add 1,187 Bcf net to Hartshead, lifting the company's total net reserves and resources to approximately 1.5 trillion cubic feet (Tcf). This expansion underscores Hartshead’s growing footprint in the UK Southern Gas Basin.
Market Conditions and Financial Health
UK National Balancing Point (NBP) gas prices remained robust through the winter, consistently trading above 115 pence per therm, supporting the economic case for Hartshead’s developments. Financially, the company maintains a strong balance sheet with over A$20 million in net current assets, providing a solid runway for ongoing exploration and development activities. Operating and investing cash flows reflect continued investment in exploration and evaluation, aligned with the company’s strategic growth plans.
Looking Ahead
CEO Christopher Lewis emphasized the company’s focus on moving the Anning and Somerville projects forward, leveraging the new fiscal regime and export route options. With joint venture consultations ongoing and regulatory engagement active, Hartshead is positioning itself to capitalize on market opportunities while navigating the evolving UK energy landscape. The company’s technical teams continue to refine subsurface models and appraise exploration prospects, aiming to unlock additional value within its license portfolio.
Bottom Line?
Hartshead’s strategic moves and fiscal clarity set the stage for critical development decisions in 2025, with market conditions and regulatory dynamics poised to shape its trajectory.
Questions in the middle?
- How will the increased Energy Profits Levy affect Hartshead’s project profitability over the long term?
- What is the timeline for the Final Investment Decision on the Anning and Somerville fields?
- How might the newly identified gas export route influence project costs and schedules?
