NORTH Sea oil and gas player Orcadian Energy has raised £1 million through a share placing and said it believes “the immediate investment allowance, included in the Energy Profits Levy, has transformed the attractiveness of domestic oil and gas projects for companies extracting oil and gas in the UK and it should spark further investment in the North Sea”.

The London-listed company said the proceeds of the 35p per share placing will go towards licence fees, its Pilot field development plan, and general working capital.

It noted the investment allowance, which was further outlined in a June update to the May announcement for an energy windfall tax by Chancellor of the Exchequer Rishi Sunak, in the City report.

The Energy Profits Levy, or windfall tax, is to be charged at 25 per cent on UK oil and gas profits earned from May 26 onwards, and is a levy on profits on top of the existing 40% headline rate of tax.

READ MORE: Rishi Sunak denies windfall tax 'undermining' industry

The government update said that the new levy will have “built in a generous allowance which will reward those companies who invest in oil and gas production”.

It incorporates an allowance of up to 91p of tax saving in every £1 spent on investment.

Steve Brown, Orcadian chief executive, said: "We are very pleased to have concluded this fund raising which enables the company to deliver our planned work programme as well as progress the previously announced farm-out process towards completion.

"We believe the immediate investment allowance, included in the Energy Profits Levy, has transformed the attractiveness of domestic oil and gas projects for companies extracting oil and gas in the UK and it should spark further investment in the North Sea."

READ MORE: Orcadian in windfarm plan to cut North Sea emissions

The Pilot field, located 85 miles east of Aberdeen, is estimated to contain about 80 million barrels.

Separately, Serica Energy said it plans an interim dividend “in view of continuing strong profitability and cash generation during 1H 2022” as cash and deposits stood at £246m on May 31 with a further £150m lodged as security.

It said the Energy Profits Levy “introduces significant investment incentives designed to encourage the reinvestment of profits such that each £1 invested by Serica can lead to an overall tax saving of up to 91.25p”.

Shares in Orcadian closed at 36p, down 7.69%, or 3p, while Serica shares closed at 285p, down 3.06%, or 9p.