REG - Harbour Energy PLC - Trading and Operations Update

Harbour EnergyAnnouncement

09/05/2024 07:00

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RNS Number : 7654N  Harbour Energy PLC  09 May 2024

Harbour Energy plc

("Harbour" or the "Company")

Trading and Operations Update

09 May 2024

 

Harbour Energy plc today provides the following unaudited Trading and
Operations Update for the first quarter of 2024 1 . This is issued ahead of
the Company's Annual General Meeting (AGM) which is being held today at 10.00
BST.

 

Operational highlights

 § Production averaged 172 kboepd (2023: 202 kboepd), split broadly equally
 between liquids and natural gas. Full year guidance of 150-165 kboepd
 reiterated
 § Operating costs averaged c.$18/boe (2023: $15/boe); full year forecast
 unchanged at c.$18/boe
 § Continued safe and responsible operations
 -     No lost time injuries or serious (Tier 1 and 2) process safety
 events
 -     Joined the UN Environment Programme Oil and Gas Methane Partnership
 2.0 (https://ogmpartnership.com/)  2  and became a member of Ipieca 3 
 § Investments at Harbour's operated UK hubs progressed including drilling at
 Callanish F6 (Greater Britannia Area), and the Talbot development (J-Area)
 which remains on track to start production around year-end
 § International growth opportunities advanced with potential for material
 reserve additions
 -     Mexico: Zama FEED due to commence shortly with contractor bids being
 evaluated; appraisal of the 2023 Kan oil discovery scheduled for H2 2024
 -     Indonesia: Further momentum with the Andaman Sea exploration
 campaign including at Tangkulo (South Andaman, Harbour 20 per cent) where
 testing is underway. Following completion of operations at Tangkulo, the rig
 will move to the final location in the current campaign to appraise the
 significant 2023 Layaran discovery (South Andaman)
 -     Norway: Small oil discovery at Ringhorne North (Harbour 15 per
 cent), close to existing infrastructure
 § Continued momentum on Harbour's UK CCS projects including good progress in
 the FEED phase for the Harbour-led Viking project

 

Financial highlights

 § Estimated revenue of c.$0.9 billion with realised, post-hedging oil and UK
 gas prices of $83/bbl and 49 pence/therm
 § Total capital expenditure of c.$250 million. Full year guidance of c.$1.2
 billion reiterated
 § Net debt reduced to $0.1 billion at end of March 2024 (YE 2023: $0.2
 billion), after c.$60 million of financing and other fees associated with the
 Wintershall DEA acquisition; Harbour's RBL debt facility remains undrawn
 § At $85/bbl and 70p/therm, Harbour continues to expect to be marginally free
 cash flow positive in 2024, after estimated tax payments of c.$1.0 billion;
 Harbour expects to generate significantly higher free cash flow next year
 resulting in a net cash position by year end 2025
 § Proposed 2023 final dividend of 13 cents per share (2022: 12 cents/share),
 in line with our $200 million annual dividend policy and representing c.9 per
 cent growth year-on-year, to be paid on 22 May 2024, subject to shareholder
 approval

 

 

Acquisition of Wintershall Dea Asset Portfolio on track to complete in Q4 2024

Harbour has made significant progress on the various workstreams and approvals
required to complete the acquisition of the Wintershall Dea asset portfolio
(the "Acquisition").

 

 § All regulatory, anti-trust and foreign direct investment approvals required
 for completion continue to progress as planned, including:
 -       Clearance received from the Federal Ministry of Economics and
 Climate Action in Germany, which satisfies the German foreign direct
 investment closing condition
 -       Consent received from the Norwegian Ministry of Energy
 § Prospectus and shareholder circular expected to be published later this
 month with the shareholder meeting to approve the Acquisition anticipated to
 take place in June

 § Irrevocable undertakings to vote in favour of the Acquisition received from
 shareholders representing c.35 per cent of Harbour's issued share capital, as
 at 8 May 2024

 § Financing workstreams completed:
 -       Successful syndication of the $3 billion revolving credit
 facility (RCF) and $1.5 billion bridge facility, with the margin on the RCF
 approximately half that of Harbour's existing RBL facility
 -       Successfully amended certain terms and conditions of the
 Wintershall Dea $4.9 billion investment grade bonds that Harbour will be
 assuming as part of the Acquisition

 § Significant progress around the design and implementation of the corporate
 organisation and systems required to support the enlarged company
 post-completion

 § Executed additional, predominantly oil, hedging for 2025 and 2026 to
 de-risk near term cash flow

 

Harbour continues to expect to complete the Acquisition during Q4 2024.

 

Linda Z Cook, Chief Executive Officer, commented:

"During the first quarter, we continued to deliver safe and responsible
operations, maximise the value of our UK production base and advance our
organic growth projects. At the same time, we made significant progress
towards completion of the Wintershall Dea acquisition which will transform our
portfolio and capital structure and support enhanced and sustainable
shareholder returns."

Enquiries

Harbour Energy plc

Elizabeth Brooks, Head of Investor Relations

020 3833 2421

 

Brunswick

Patrick Handley, Will Medvei

020 7404 5959

 

 

Appendix 1: Group production

                              Q1 2024           Q1 2023

                               (net, kboepd)     (net, kboepd)
    Greater Britannia Area    26                28
    J-Area                    24                36
    AELE hub                  26                26
    Catcher                   14                20
 Tolmount                     17                16
    Elgin Franklin            17                21
    Buzzard                   9                 12
    Beryl                     13                11
    West of Shetlands 4       12                15
    Other North Sea           3                 7
 North Sea                    161               192
 International                11                10
 Total Group                  172               202

 

Appendix 2: Hedging schedule 5 

          2024                   2025             2026             2027
          Volume  Average Price  Volume  Average  Volume  Average  Volume  Average

                                         Price            Price            Price
          mmboe   p/therm        mmboe   p/therm  mmboe   p/therm  mmboe   p/therm
 Swaps    10.1    54             6.8     86       3.6     86       1.0     79
 Collars  3.0     112-263        1.7     98-233   0.4     80-150   0.0     0
 UK gas   13.1    67             8.5     89       4.0     86       1.0     79
          mmbbl   $/bbl          mmbbl   $/bbl    mmbbl   $/bbl    mmbbl   $/bbl
 Oil      7.3     84             8.0     78       6.9     73       0       N/A

 

 

 

 

 

 

 1  All operational and financial highlights, guidance and sensitivities,
including free cash flow, assume the sale of Harbour's Vietnam business
completes on 30 June 2024 and exclude the impacts of the announced Wintershall
DEA asset portfolio acquisition and any fees relating to the Acquisition
unless stated otherwise.

 2  Oil & Gas Methane Partnership 2.0 is the United National Environment
Programme (UNEP) flagship oil and gas reporting and mitigation programme.

 3  Ipieca (International Petroleum Industry Environmental Conservation
Association) was founded at the requested of the United Nations and is the
global oil and gas association for advancing environmental and social
performance

 4  West of Shetlands includes Clair, Schiehallion and Solan

 5  As of 7 May 2024 and assumes the forward curve, as of 7 May 2024, when
determining the collar strike prices

 

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