An oil and gas operator has taken a £5million hit by allowing a North Sea licence to lapse because it fears UK Government tax changes will make the project unviable.
Europa Oil & Gas (Holdings) plc has announced its latest results and blamed "continued uncertainty" around the industry regulations and fiscal conditions.
Providing an update on the Serenity project in the North Sea, the company said it had allowed the licence to lapse at the end of September due to concerns new legislation could "negatively impact the economics" of the project.
It indicated this resulted in an almost £5million hit to the capitalised costs linked to the project.
The update adds: "The recent change in government in the UK and the continued uncertainty of the domestic regulatory and fiscal environment has sharply increased the possibility of future fiscal changes for the oil and gas industry, which we believe could negatively impact the economics of the Serenity project.
"Given that the Serenity licence was due to expire at the end of September 2024, we have therefore taken the decision to allow the licence to lapse, which has resulted in a £4.9 million impairment of the capitalised costs associated with the project."
The company also confirmed it had elected not to accept a proposed shared licence tabled by the North Sea Transition Authority.
The report said: "The board believes that the risk/reward proposition for new assets in the UK is currently challenging."
The Wressle field situation is also addressed in the statement with the Finch Supreme Court ruling and associated legal challenge.
It stated: "In September 2024, we were delighted that planning approval was awarded for two new development wells on the Wressle field which we expect to drill back-to-back next year.
"As a result of the Finch Supreme Court ruling and a proposed legal challenge to the granting of planning permission for the next phase of the Wressle development, it is expected that the planning consent will be rescinded once the court process has concluded.
"The Wressle Joint Venture plan to submit further information that covers potential scope three emissions such that a future planning process could be approved."