Shares in UK oil exploration companies have risen by as much as 50pc. The sharp rise in oil company shares has been fuelled by a recovery in the price of Brent crude which has repeatedly edged above $40-a-barrel. As a result of the higher oil price, which has risen by 40 per cent in the last two months, independent oil companies Premier Oil, Cairn Energy and Tullow Oil have seen a recovery in their share price.
Higher oil prices are in response to expectations of an output freeze by the world’s largest producers gains traction within the market.

The rise in Premier Oil’s share response is due in part to the expectation that the company will seek to make efficiency savings by merging its logistic operations with another North Sea explorer.

Tullow Oil is well positioned to take advantage of the upturn in oil prices due to strong hedge positions. Shares in Tullow Oil have climbed 40pc in the past two weeks.

Despite the recent upbeat news, the North Sea oil industry is pressing the chancellor for a rescue package of tax breaks in the upcoming budget. The sector claims that it is “fighting hard for its survival” as oil prices have fallen sharply.

Oil & Gas UK have suggested that 14bn barrels of an estimated 20bn barrels of oil lying beneath the UK continental shelf in the North Sea would not be extracted unless market conditions improved. If this were to happen then ‘hundreds of thousands of skilled jobs could be lost’. The lobby group has also suggested that billions of pounds of tax revenues could be lost and the UK’s energy security could be undermined.

The industry would like taxes on production cut. They would also like incentives to be offered to oil exploration companies to make it worthwhile to explore and exploit North Sea oil fields.

The important question for the industry is, whether or not the Chancellor is listening?