Natalia Katona
8 min read
The UK North Sea is being reshaped by consolidation at a pace not seen since the aftermath of the 2014 oil price crash. In the past twelve months alone, a series of mergers has concentrated more than 500,000 boe/d of production into a handful of operators, as companies respond to a 78% marginal tax rate, falling output and an investment environment that has effectively closed to new developments. Deals involving Harbour Energy, TotalEnergies, Shell, Equinor and Ithaca Energy have created fewer but larger players managing a basin where production has fallen from 1.1 million b/d in 2020 to about 474,000 b/d by September 2025, and where no new field approvals have been granted for two consecutive years.
Over the past year, mergers and acquisitions have become the defining feature of the UK offshore sector. On December 12, Harbour Energy announced its plans to acquire Waldorf Petroleum by the second quarter of 2026. The deal will add about 20,000 boe/d and 35 million barrels of reserves, raising Harbour’s interest in the Catcher field to 90%. Earlier that same week, TotalEnergies said it would merge its British North Sea oil and gas assets with Neo Next, the Repsol–Repsol-HitecVision-backed producer that has already grown into the country’s second-largest operator. The enlarged entity, to be branded Neo Next Energy+, will be 47.5% owned by TotalEnergies, with Repsol holding 23.6% and HitecVision 28.8%. Once finalised in the first half of 2026, the combined portfolio is expected to produce around 250,000 boe/d. These deals follow December’s formalization of Adura, the 50–50 joint venture between Shell and Equinor, which consolidated a broad set of mature assets, including Buzzard, Mariner, Shearwater, Penguins, Clair, and Schiehallion. Adura is expected to produce roughly 140,000 boe/d in 2026. Earlier, Ithaca Energy absorbed Eni’s UK portfolio, becoming the third-largest producer in the basin. At the same time, US majors Apache and Chevron have formally announced their intention to exit the UK Continental Shelf, whilst China’s CNOOC is still struggling to find a suitable buyer for its offshore assets
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The UK’s consolidation wave is primarily rooted in a fiscal regime that has steadily hardened since the introduction of the Energy Profits Levy (EPL) in May 2022. Triggered by the surge in oil and gas prices following the pandemic and start of the war in Ukraine, the levy was initially presented as a temporary windfall tax aimed at capturing extraordinary profits while British households faced soaring energy bills. However, what followed was a series of extensions by both the conservative and labour governments that pushed the levy’s expiry first to March 2029, then to March 2030 and lifted the combined marginal tax rate on UK upstream revenues to 78%. If the EPL expires (either with time, or if average prices for both oil and gas remain below trigger levels – $71.4/b for oil and £0.54/MMBtu for gas – for two consecutive quarters), it will be replaced by the Oil and Gas Price Mechanism (OGPM), under which revenues generated at oil prices above $90/b will face an additional 35% charge, with the trigger indexed annually to UK consumer inflation. Crucially, the mechanism is revenue-based rather than profit-based – a design choice the industry had strongly opposed. For many operators, the unpredictability of repeated ‘temporary’ measures has already undermined confidence, making future clarity less valuable than it might have been a few years earlier.
