THE chief executive of Harbour Energy, Linda Cook, is in line to get shares in the North Sea giant worth more than £3 million after the firm claimed the windfall tax had ‘all but wiped out’ its profits.

Harbour has played a prominent role in industry efforts to get the Government to scrap the tax, in response to which the firm has announced plans for cuts in UK investment. These are expected to result in hundreds of job losses.

The company said in March that its bottom line profits fell to just $8m (£6.6m) last year following the introduction of the Energy Profits Levy (EPL), in spite of the surge in oil and gas prices fuelled by Russia’s full scale invasion of Ukraine.

The results cover a year during which the rise in commodity prices resulted in a dramatic increase in revenues at Harbour and other firms operating in the North Sea.

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In the annual report which it published last week Harbour said Ms Cook had decided to forego a four per cent increase in her £850,000 base salary for 2023, worth £34,000, citing the “material impact on the future profitability and the value of the company” following the introduction of the EPL last year.

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However, a regulatory filing published by Harbour after the stock market closed on Monday shows Ms Cook is in line to be awarded around 1.2 million shares in the firm under its directors’ remuneration policy. The awards would be worth £3.2m in total based on the 269p average closing price for Harbour shares in the five days before they were made.

They include a long term incentive plan element worth up to 300 per cent of Ms Cook’s salary, subject to performance conditions being met in the three years to December 31 2025.

The disclosure may fuel controversy about the amount of money firms operating in the North Sea expect to make in coming years and what that could mean for their directors.

Harbour has reinforced warnings by industry leaders that the windfall tax could prompt firms to slash spending in the North Sea.

The EPL rate was increased to 35% in November from the 25% level set when the levy was introduced in May. The increase left firms paying a total 75% rate on earnings, including corporation tax.

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Last month Harbour said it would ‘scale back’ UK investment in response and complete a review of its organisation which it added was expected to lead to a significant reduction of its workforce in the country.

Harbour has become one of the biggest firms operating in the North Sea after expanding rapidly in the area with backing from US investment business EIG.

Harbour’s annual report shows the company’s boardroom pay bill totalled around £6m last year. Ms Cook’s package was worth £3.1m.

Ms Cook’s remuneration for 2021 totalled £6m. She became chief executive of Harbour Energy in April 2021 after serving on EIG’s executive committee.

Ms Cook’s total remuneration for 2021 included £4.5m awarded in respect of the loss of incentive arrangements she had as part of her employment at EIG. 

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The company’s annual report says Harbour’s remuneration committee reviewed salary levels in early 2023 and supported an average 6% increase for the broader workforce, with directors to get a 4% rise from April.

Harbour grew revenues to $5.4bn in 2022, from $3.6bn in the preceding year.

Earnings before tax, depreciation, amortisation, impairments and exploration spending increased to $4bn from $2.4bn.

The $8m bottom line profit was stated net of tax charges totalling $2.4bn. These included a $1.5bn non-cash accounting provision for deferred tax in respect of the EPL.

The awards announced on Monday include 947,955 shares in Harbour Energy worth £2.5m, in respect of the firm’s 2017 LTIP and 237,000 shares, worth £637,000, representing 50% of Ms Cook’s total £1.275m bonus for 2022. The relevant deferred bonus awards are due to vest in April 2026. 

Harbour Energy shares sold for 282.6p yesterday afternoon.