The Hurricane Energy PLC (LON: HUR) share price edged 2% higher after revealing that the formal sale process that started earlier this month was progressing well and that it was in discussions with several interested parties.
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The company also updated investors on the impact of the recently increased Energy Profits Levy (EPL), which the government increased from 25% to 35% starting January 2023. The company also noted that the investment allowance for oil producers had been reduced to 29%.
The firm united that the government policies had maintained its current cash value. Furthermore, investors should remember that the EPL will remain in force until 2028. For the current year, Hurricane Energy told investors that its EPL charge would not exceed $5 million due to the capital allowances due to the company in the current year.
The company expects its EPL charges for 2023 and 2024 to be the same despite the impact of the new rates. However, its calculations are based on oil prices remaining at current levels, and the situation could change if oil prices move higher or lower.
The company’s cost base will also play a crucial role in its EPL payments, as will its revenues, which are driven by oil prices. Investors should remember that the company did not want to start a formal sale process but had little choice since a majority shareholder wanted to cash out.
There are no guarantees that a sale will be formalised despite Hurricane Energy being a profitable energy company with solid prospects. Only time will tell if a sale can be affected.
*This is not investment advice.
Hurricane Energy share price.
The Hurricane Energy share price edged 1.98% higher to trade at 7.888p, rising from Thursday’s closing price of 7.735p.
