Tax-breaks proposed last week will boost EnQuest and a number of other London listed North Sea oil stocks, according to City firm Numis Securities.

Chancellor of the exchequer George Osborne proposed a new tax relief initiative that will allow oil firms to shelter a portion of their income from certain mature oilfields.

The field must be increasing production volumes, as a result of re-development work, to qualify for the tax break.

Numis analyst Sanjeev Bahl told clients that although it is difficult to assess the immediate impact of the tax break, in valuation terms, but he believes it will be material for EnQuest.

He explains that the new allowance will put back the time that the companies start to pay cash tax and reduce the amount of cash tax to be paid.

Bahl also highlights that it should help boost recoverable reserves by lengthening the life of mature fields – because the fields will be more economic for longer.

“We believe the main beneficiary of the change is EnQuest given is North Sea exploitation focus (and PRT paying fields). We expect several field life opportunities around the existing production hubs (Don / Don SW, Heather/Broom, Thistle/Deveron) to benefit,” Bahl said in a note.

“Other beneficiaries will be mature North Sea producers such as Premier Oil, Valiant and to a very small extent Tullow. Companies with less mature North Sea assets should see a small benefit towards the end of field life as they pursue field life extension upgrades/tie-backs.”

The government claims the tax break could save firms up to £160 million.

The treasury believes the initiative will cost it £100 million a year, but will boost the North Sea industry and help attract an extra £2 billion of investment in the sector – in turn driving greater tax revenues in the long term.

Industry group Oil & Gas UK claim that the changes could see an additional 150 million barrels of oil produced from maturing fields that would otherwise be left in the ground.

“(We are) encouraged by the support announced for oil and gas ‘brown-fields’ in the UK which typically have high running costs and are subject to up to 81 per cent tax on production,” said Mike Tholen, economics and commercial director of industry group Oil & Gas UK.

“This initiative will have an immediate impact in that it will help to promote investment and sustain production from many mature fields, enabling more oil and gas to be recovered from them and postponing decommissioning by a number of years.”