TWO leading North Sea-focused firms have generated $3.3 billion (£2.5bn) cash in total from their operations in the latest year as one warned it expected gas prices to remain at very high levels for some time amid the war in Ukraine.

Neptune Energy said: “While it is too early to determine how long the conflict in Ukraine may last, continued disruptions in energy markets seem likely as buyers seek alternative oil and gas supplies to Russia, with gas prices expected to remain at very high levels in the medium term.”

The company is understood to think prices could remain at elevated levels for two years or so. It said the fallout from the war had added fresh impetus to a surge in oil and gas prices which was partly due to under-investment in new developments in recent years.

READ MORE: North Sea gas field start up boosts UK supplies amid Ukraine war fallout

The rise in prices last year helped private equity-backed Neptune to generate $1.7 billion cash from its operations.

Harbour Energy, which describes itself as the largest London-listed independent oil and gas company, said it generated $1.6bn cash from operations last year.

HeraldScotland: Harbour Energy chief executive Linda Cook Picture: Harbour EnergyHarbour Energy chief executive Linda Cook Picture: Harbour Energy

Neptune and Harbour are using some of the cash generated to fund big payouts to investors.

The results announcements by the firms could stoke calls for a windfall tax to be imposed on oil and gas firms in the UK. Millions of consumers face steep increases in their energy bills this year.

However, energy industry leaders have said a windfall tax could stifle the investment needed in the North Sea if the UK wants to reduce its reliance on imports.

READ MORE: BP rejects windfall tax calls as gas price rise boosts profits

Boris Johnson held a meeting with oil and gas company bosses on Monday, at which he is said to have discussed ramping up investment in the North Sea and boosting the supply of domestic gas. Neptune’s executive chairman Sam Laidlaw and Harbour ‘s chief executive Linda Cook were at the meeting.

HeraldScotland: Neptune Energy operates the giant Cygnus gas field in the North Sea Picture: NeptuneNeptune Energy operates the giant Cygnus gas field in the North Sea Picture: Neptune

Mr Laidlaw, a former chief executive of Scottish Gas-owner Centrica, won backing from investors to establish Neptune during the last downturn.

Financiers decided the slump created the opportunity to buy assets in the North Sea at attractive prices.

Harbour developed out of the Chrysaor Energy business, which won support from private equity investors to buy big North Sea portfolios from Shell and ConocoPhillips.

Chrsyaor acquired Premier Oil in April. The enlarged group adopted the Harbour Energy name and took over Premier’s stock market listing.

READ MORE: Shell eyeing North Sea gas developments after Cambo oil field U-turn

Yesterday’s results announcements show Neptune and Harbour have reaped big rewards for their decision to invest heavily in the North Sea.

Harbour said it had built a strong balance sheet which would help it cope with the challenges posed by the triple impacts of a global pandemic, an uneven path towards a lower carbon economy and the conflict in Ukraine.

“Against this backdrop, and with volatile commodity prices, we are generating material and resilient free cash flow, underpinned by our high quality, diverse UK asset base,” said the company.

HeraldScotland: Neptune Energy executive chairman Sam Laidlaw Picture: NeptuneNeptune Energy executive chairman Sam Laidlaw Picture: Neptune

Neptune said “strong earnings and cash flow” had enabled it to pay dividends and to make capital distributions totalling $1bn.

In December Harbour announced plans to introduce an initial $200m annual dividend. It will pay $100m in respect of 2021 in May.

Both firms are set to increase production in the North Sea.

Harbour is preparing to start production from the giant Tolmount gas field off eastern England.

Neptune expects to bring the Seagull oil field onstream east of Aberdeen in the first half of next year. It plans to drill an appraisal well on the “significant” Isabella find.

READ MORE: Plans to develop billion barrel oil field off Shetland set to be revived

Harbour included the Talbot field in a portfolio of organic growth projects that could add materially to production. The field could be tied in to existing North Sea infrastructure. It was appraised successfully last year.

However, Harbour said a find it made with the Dunnottar well which it drilled with Eni did not appear to contain commercial levels of hydrocarbons.

Harbour Energy shares closed up 17.2p at 413.6p.

Harbour generated $700m operating profit in the North Sea last year, during which its international business lost $59m. This includes operations in Indonesia and Mexico.

Neptune generated $1.2bn operating profit from its operations in the UK, Norway and the Netherlands.

It generated $212m profit from operations in the North Africa and Asia Pacific regions and onshore Germany.