REG - Harbour Energy PLC - Trading and Operations Update

Harbour EnergyAnnouncement

Thu 07:01

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250508:nRSH7858Ha&default-theme=true

RNS Number : 7858H  Harbour Energy PLC  08 May 2025

Harbour Energy plc

("Harbour" or the "Company")

Trading and Operations Update

8 May 2025

 

Strong first quarter performance and ongoing business resilience

 

Harbour today provides the following unaudited Trading and Operations Update
for Q1 2025. This is issued ahead of the Company's Annual General Meeting
(AGM), to be held today at 10.00 BST.

 

Linda Z Cook, Chief Executive Officer, commented:

"We had a strong start to the year. Production averaged 500 kboepd in the
first quarter, reflecting the addition of the high quality Wintershall Dea
portfolio and excellent operational delivery. This, together with improved
European gas price realisations and lower unit costs, drove significant free
cash flow of c.$0.7 billion.

 

"Recent market volatility reinforces the benefits of our diverse portfolio and
our prudent approach to risk management. In relation to this, since early
March, we successfully issued $0.9 billion of senior notes and €0.9 billion
of hybrids. In addition, we are taking mitigating actions which, together with
our improved production outlook, largely offset the impact of lower commodity
prices. Given this progress, we remain well positioned to deliver against our
capital allocation priorities."

 

Strong operational delivery and growth opportunities matured

 §        Materially increased and diversified production of 500 kboepd (Q1 2024: 172
          kboepd), split broadly 40% liquids, 40% European gas, 20% non-European gas
 -        Full contribution from the Wintershall Dea assets, including 180 kboepd from
          Norway, now our largest producing country
 -        High reliability across the portfolio with 90% production efficiency achieved
 -        New wells onstream in the UK, Argentina, Egypt and Germany

 §        Unit operating costs c.30% lower at $13/boe (Q1 2024: $18/boe), driven by the
          addition of the Wintershall Dea portfolio and strong Q1 production

 §        Continued focus on safe and responsible operations with no serious (Tier 1 or
          2) process safety events and lower greenhouse gas intensity of 12 kgCO(2)/boe
          (Q1 2024: 24 kgCO(2)/boe)(1)

 §        High return, short cycle investments on track, including Maria Phase 2
          (Norway) production start-up expected this quarter, two UK infill wells due
          on-stream mid-year, and a multi-pad drilling campaign underway at the Aguada
          Pichana Este license in the Vaca Muerta (Argentina)

 §        Material growth opportunities matured, underpinning future reserves
          replacement and portfolio optionality:
 -        Final investment decision taken post period end on Southern Energy LNG
          (Argentina), a two-vessel c.6 million tonne per annum project, providing
          access to international markets for Harbour's Argentinian gas resources
 -        Good progress in Mexico regarding the development of Zama; Kan gross resource
          estimate upgraded by 50% to c.150 mmboe (Harbour, 70% operated interest)
 -        Evaluating development options for the multi-TCF Andaman Sea gas play
          (Indonesia), including the potential accelerated development of the Tangkulo
          discovery
 -        Exploration success with two gas discoveries close to our West Nile Delta
          infrastructure in Egypt, and an oil discovery at the Skarv-E prospect in
          Norway, close to the Skarv FPSO

 §        In our UK Business Unit, post period end, we initiated a review of our
          Aberdeen-based organisation which is expected to result in at least a 25%
          reduction in headcount, to align with significantly lower investment levels in
          light of the continued challenging domestic fiscal and regulatory environment

 

Significant free cash flow generation reduces net debt by $0.5 billion

 §        Revenue of $2.8 billion (Q1 2024: $0.9 billion) for the first quarter,
          reflecting higher production and realised post-hedge oil and European gas
          prices of $74/bbl and $14/mscf respectively

 §        A strong 2025 hedge position covering c.40% of liquids and European gas
          volumes; additional European gas hedges for 2026 and 2027 secured, in line
          with hedging policy (full hedging schedule in appendix)

 §        Total capital expenditure for the period of c.$0.5 billion (Q1 2024: c.$0.3
          billion)

 §        First quarter free cash flow of $0.7 billion (Q1 2024: $0.1 billion),
          reflecting the timing of tax payments and phasing of capital expenditure

 §        Pre-funded all hybrid and senior note maturities through end 2027 with the
          successful issuance of $1.9 billion of bonds comprising:
 -        $0.9 billion senior notes (6.3275%) issued in March; final book >3x
          oversubscribed
 -        €0.9 billion of hybrid notes (6.117%) issued in April, with a successful
          concurrent tender offer for €0.52 billion of the NC26 hybrid notes, further
          supporting the balance sheet through additional €0.25 billion of hybrid
          capital layer

 §        Investment grade credit ratings of Baa2 and BBB- with stable outlook
          reconfirmed by Moody's and Fitch, respectively

 §        Significant liquidity of c.$3.7 billion consisting of c.$1.3 billion of cash
          and c.$2.4 billion of RCF availability at 31 March

 §        Net debt reduced from c.$4.7 billion at 31 December 2024 to $4.2 billion at 31
          March, with c.$0.7 billion of free cash flow partially offset by a stronger
          USD increasing the USD value of our pre-swap EUR denominated senior bonds by
          c.$0.2 billion

 §        Proposed 2024 final dividend of $227.5 million (13.19 cents per ordinary
          share), in line with Harbour's $455 million annual dividend policy ($380
          million paid on the voting ordinary shares), to be paid on 21 May 2025,
          subject to shareholder approval

 

Improved 2025 guidance(2) and updated outlook for cash flow

 §        Full year production guidance narrowed upwards to 455-475 kboepd (450-475
          kboepd previously), reflecting the strong year-to-date performance and ahead
          of the planned summer maintenance programmes in Norway and the UK

 §        Full year operating cost forecast unchanged at c.$14/boe, with strong cost
          performance offset by a weaker USD outlook

 §        Expected total capital expenditure for the full year narrowed to $2.4-2.5
          billion (from $2.4-2.6 billion), driven by further high-grading of the capital
          programme

 §        2025 free cash flow outlook updated to c.$0.9 billion, assuming $65/bbl and
          $12/mscf for Q2-Q4 (previously $1 billion at $80/bbl and $13/mscf)(3)
 -        Reflects the phasing of capital expenditure and timing of tax payments later
          in the year
 -        Includes accelerated initiatives to reduce costs and high-grade the capital
          programme in response to recent market volatility; these actions, together
          with the improved production outlook and working capital management, increase
          2025 free cash flow by c.$0.2 billion, largely offsetting the impact of lower
          commodity prices

 §        Our diverse portfolio, prudent financial risk management and strong
          performance year to date mean we remain well positioned to deliver against our
          capital allocation priorities.  Depending on market conditions, this includes
          the potential for additional shareholder returns via buybacks later this year

 

 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) Scope 1 and 2 emissions on a net equity basis

( )

(2) 2025 guidance does not include the impact of the sale of Vietnam. 2025
guidance assumes a USD to GBP exchange rate of $1.30/£, USD to EUR exchange
rate of $1.1/€ and a Norwegian NOK to USD exchange rate of NOK10.5/$ (vs
$1.25/£, $1.1/€ and NOK11/$ previously)

 

(3) A $5/bbl change in 2025 Brent oil prices or a $1/mscf change in 2025
European gas prices impacts full year free cash flow by c.$115 million,
assuming a stable USD foreign exchange rate. 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:

 

Group production

 

               Q1 2025         Q1 2024

               (net, kboepd)   (net, kboepd)
   Norway      180             NA
   UK          165             161
   Germany     29              NA
   Argentina   74              NA
 Mexico        10              NA
 North Africa  33              NA
   SE Asia     9               11
 Total Group   500             172

 

 

Hedging schedule

 

                    2025                   2026                   2027
                    Volume  Average Price  Volume  Average Price  Volume  Average Price
                    mmboe   $/mscf         mmboe   $/mscf         mmboe   $/mscf
 Europe and UK gas  36      12.5           24      10.5           6       9.9
                    mmbbl   $/bbl          mmbbl   $/bbl          mmbbl   $/bbl
 Oil                18      75             14      73             1       64

As at 30 April 2025

 

 Realised post-hedge pricing

 

                                      Q1 2025  Q1 2024
 Liquids ($/boe)                      70       79
 European gas (includes UK) ($/mscf)  13.9     6.2
 Non-European gas ($/mscf)            3.4      12.6

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFZGGKMNDGKZZ