Stocks to explore ahead of a windfall tax on electricity generators

Highlights

• UK Chancellor Jeremy Hunt has declared his plans to levy a windfall tax on electricity generation firms.
• North Sea oil and gas operators are also set to face more troubles as the current tax levied on them is expected to go up from 25% to 35%.
• Over the next six years, funds worth £45 billion are expected to be generated through the two windfall taxes, Financial Times said.

While the cost-of-living crisis is growing in the UK, chancellor Jeremy Hunt has declared his plans to levy a windfall tax on electricity generation firms. Reportedly, Hunt would charge energy firms with a 40% windfall tax on their surplus profits to finance the government's actions to control the escalating inflationary crisis.

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The chancellor is contemplating a tax on the additional gains made by energy generation businesses which are higher than a particular price per megawatt hour. But that threshold hasn't been agreed upon yet. North Sea oil and gas operators, already facing the burden of a windfall tax, are also set to face more troubles as the tax levied on them is expected to go up from 25% to 35%. Moreover, the tax would be prolonged by two years up to 2028.

Over the next six years, funds worth £45 billion are expected to be generated through the two windfall taxes, Financial Times said. However, this figure would be impacted by the changes in energy prices. It had been projected that the North Sea windfall tax would generate a fund worth approximately £28 billion over four years.

Amid these windfall tax speculations, UK investors can keep an eye on the following North Sea oil and gas-producing firms trading on the London Stock Exchange.

Shell plc (LON: SHEL)

The FTSE100-listed oil and gas giant Shell plc's market capitalisation stood at £167,941.71 million as the market opened on Thursday morning. After closing at GBX 2,370.50 on Wednesday, SHEL shares were down by 0.74% at around 8:00 AM (GMT) on Thursday and were trading at GBX 2,353.00. The returns offered by the company on an annual and YTD (year to date) basis at the time of writing stood at 38.33% and 45.12%, respectively. With a turnover (on book) of £4,291,390.65, the firm's EPS (earning per share) stood at 2.59.

BP plc (LON: BP.)

The market capitalisation of the FTSE100-listed oil and gas supermajor, BP plc, stood at £87,927.61 million as the market opened on Thursday morning. After closing at GBX 481.35 on Wednesday, BP. shares were down by 0.58% at around 8:00 AM (GMT) on Thursday and were trading at GBX 478.55. The returns offered by the company on an annual and YTD basis at the time of writing stood at 38.85% and 44.75%, respectively. With a turnover (on book) of £4,607,385.23, the firm's EPS stood at 0.38.

Harbour Energy plc (LON: HBR)

The market capitalisation of the greatest FTSE100-listed North Sea operator, Harbour Energy plc, stood at £2,879.17 million as the market opened on Thursday morning. After closing at GBX 333.70  on Wednesday, HBR shares were up by 0.24% at around 8:00 AM (GMT) on Thursday and were trading at GBX 334.50. The returns offered by the company on an annual and YTD basis at the time of writing stood at -13.43% and -5.85%, respectively. With a turnover (on book) of £200,038.42, the firm's EPS stood at 0.12.