REG - Harbour Energy PLC - Trading and Operations Update

Harbour EnergyAnnouncement

23/01/2025 07:00

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RNS Number : 4355U  Harbour Energy PLC  23 January 2025

Harbour Energy plc

("Harbour")

Trading and Operations Update

23 January 2025

 

Harbour Energy today provides the following unaudited Trading and Operations
Update for the year ended 31 December 2024, ahead of announcing its Full Year
Results on 6 March 2025.

 

Actuals to 31 December 2024 reflect the completion of the Wintershall Dea
transaction on 3 September 2024 and include approximately four months of
contribution from the acquired portfolio.

 

Linda Z Cook, Chief Executive Officer, commented:

"2024 was a transformational year with the completion of the Wintershall Dea
transaction delivering a step change in our scale and geographic
diversification, improving our margins, increasing our reserve life and
expanding our resource base significantly.

 

"Looking to 2025, we will continue to prioritise safe and efficient operations
as we complete the integration of our new business units, mature our
significant 2C resource base and maintain disciplined capital allocation. With
our high quality portfolio, financial strength and strong team, we are
well-positioned for continued execution of our strategy."

 

2024 Operational highlights

 §   Completed transformational acquisition of the Wintershall Dea asset portfolio
     (the "Acquisition"); integration progressing as planned

 §   Materially increased and diversified production, averaging 258 kboepd (2023:
     186 kboepd), up c.40 per cent and in line with guidance. Production was split
     approximately 40% liquids, 45% European gas and 15% non-European gas. On a
     proforma basis, production was 479 kboepd

 §   Unit operating costs averaged $16.5/boe (2023: $16.4/boe), in line with
     guidance

 §   Total recordable injury rate of 1.0 per million hours worked (2023: 0.7),
     reflecting a TRIR of 1.6 from the newly acquired assets for the last four
     months of 2024

 §   Successful start-up of the Fenix (Argentina) and Talbot (UK) projects, and
     development wells on stream at Skarv and Njord (Norway) and Greater Britannia
     and AELE (UK)

 §   Progress at new developments supporting future production, including Maria
     Phase 2 and Dvalin North (Norway), and commencement of a multi-pad drilling
     campaign at the Aguada Pichana Este licence in the unconventional Vaca Muerta
     play (Argentina)

 §   Successful results from all six infrastructure-led exploration and appraisal
     wells drilled in the North Sea, including at Storjo and Sabina (Norway) and
     the Gilderoy and Jocelyn South discoveries (UK), with the latter expected
     on-stream in Q1 2025

 §   Significantly increased and diversified 2P reserves and 2C resources providing
     a platform for organic reserve replacement; key growth projects advanced:
     -    Mexico: Zama FEED nearing completion; successful appraisal drilling at
     the Kan discovery
     -    Argentina: Acquired a 15 per cent interest in the Southern Energy FLNG
     export project; commercial agreements progressed ahead of a potential
     investment decision
     -    Indonesia: Multi-well Andaman Sea exploration and appraisal campaign
     completed with material gas discoveries at Layaran and Tangkulo; 60% operated
     interest in Central Andaman licence secured

 §   Active management of enlarged CCS portfolio with a focus on building a
     competitive business with long term cash flow potential. Final investment
     decision (FID) taken for the Greensand Future project in Denmark, marking
     Harbour's first CCS project to reach this milestone. Decision made to exit the
     Camelot licence in the UK

 §   Post period end, agreed sale of Vietnam business to EnQuest for $84 million
     (effective date 1 January 2024), with completion targeted during 2025. This is
     consistent with ensuring our capital and resources are deployed in line with
     our strategy as we continue to actively manage our portfolio

 

2024 Financial highlights

 §   Significantly higher revenue of c.$6.1 billion (2023: $3.7 billion), driven by
     increased production. Realised post-hedging oil, European and non-European gas
     prices of $82/bbl, $11/mscf and $4/mscf, respectively (2023: $78/bbl, $7/mscf,
     $13/mscf)

 §   Increased EBITDAX of c.$4.1 billion (2023: $2.7 billion).  Pre- and post-tax
     income anticipated to be impacted by material non-cash accounting charges
     largely driven by adverse changes to the UK fiscal regime

 §   Estimated total capital expenditure (of c.$1.8 billion (2023: $1.0 billion),
     including c.$0.3 billion of decommissioning, in line with guidance

 §   Anticipated to be broadly free cash flow neutral in 2024, excluding one-off
     acquisition related costs and distributions. This reflects a material negative
     working capital movement and an unplanned outage at East Irish Sea in the UK
     in Q4

 §   Shareholder distributions of $0.2 billion (2023: $0.4 billion) resulting in
     c.$1.2 billion returned to shareholders through dividends and share buybacks
     over the last three years

 §   Estimated net debt of $4.7 billion at 31 December, unchanged from 30 September
     with a favourable foreign exchange rate movement offsetting cash outflow
     during Q4

 §   Debt structure transformed with the reserves-based debt facility replaced with
     unsecured, lower cost and more flexible bank facilities; corporate and senior
     unsecured issue credit ratings upgraded to investment grade Baa2, BBB- and
     BBB- from Moody's, S&P and Fitch, respectively

 

2025 Guidance and outlook(1)

 §   2025 production of 450-475 kboepd, materially higher than in 2024, reflecting
     a full year's contribution from the Wintershall Dea portfolio and broadly
     stable production in the UK

 §   2025 unit operating costs of c.$14/boe, significantly lower than 2024 due to a
     full year's contribution from Wintershall Dea's lower cost portfolio

 §   Total capital expenditure (including decommissioning spend) of c.$2.4-2.6
     billion, with the increase on 2024 reflecting the addition of the Wintershall
     Dea portfolio partially offset by materially reduced capital investment in the
     UK and lower exploration and appraisal spend in Indonesia and Mexico

 §   At Brent oil prices of $80/bbl and European and UK natural gas prices of
     $13/mscf, estimated 2025 free cash flow of c.$1.0 billion(2)

 §   Post year-end, Harbour has continued to execute its hedging policy, securing
     additional Brent oil and European natural gas hedges for 2025, 2026 and 2027

 §   In line with our increased annual dividend policy, Harbour expects to pay $455
     million in total dividends, comprising a $227.5 million final dividend for
     2024 and a $227.5 million 2025 interim dividend

 

 Upcoming events
 Harbour plans to host a Capital Markets Update on Thursday 6 March 2025
 following its Full Year Results.

 Enquiries
 Harbour Energy
 plc
 +44 (0) 203 833 2421
 Elizabeth Brooks, SVP Investor Relations
 Andy Norman, SVP Communications

 Brunswick (PR advisors)

 +44 (0) 207 404 5959
 Patrick Handley
 Will Medvei

 

(1) 2025 guidance does not include the impact of the sale of Harbour's Vietnam
business. 2025 guidance assumes a US dollar to GBP sterling exchange rate of
$1.25/£, US dollar to Euro exchange rate of $1.1/€ and a Norwegian NOK to
US dollar exchange rate of NOK11/$

 

(2) A $5/bbl change in 2025 Brent oil prices or a $1/mscf change in 2025
European gas prices impacts free cash flow by c.$115 million. Free cash flow
sensitivity assumes mid-point of production and capex guidance. A 1:1
conversion rate for $/mmbtu to $/mscf has been assumed.

 

 

Appendix:

 

Hedging schedule(1)

 

                    2025                   2026                   2027
                    Volume  Average Price  Volume  Average Price  Volume  Average Price
                    mmboe   $/mscf         mmboe   $/mscf         mmboe   $/mscf
 Europe and UK gas  36      14             21      12             3       11
                    mmbbl   $/bbl          mmbbl   $/bbl          mmbbl   $/bbl
 Oil                16      77             13      73             0       -

(1) As at 21 January 2025

 

 

Group production

Reported production reflects approximately four months' contribution from the
Wintershall Dea portfolio. Proforma production reflects 12 months´
contribution from Wintershall Dea portfolio.

 

               1 Jan  - 31 December 2024   1 Jan  - 31 December 2024

               (net, kboepd) reported      (net, kboepd) proforma
   UK          149                         149
   Norway      52                          178
   Germany     10                          30
   Argentina   21                          61
 Mexico        4                           11
 North Africa  12                          38
   SE Asia     11                          11
 Total Group   258(1)                      479(1)

 

(1) Total might not equal sum of component parts due to rounding. Total
includes c.0.1 kboepd (reported) and c.0.5 kboepd (proforma) from Denmark.

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