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Harbour EnergyAnnouncement

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RNS Number : 3235D  Harbour Energy PLC  07 May 2026

Harbour Energy plc

("Harbour" or the "Company")

Trading and Operations Update

7 May 2026

 

Strong operational performance and improved free cash flow outlook

 

Harbour today provides the following unaudited Trading and Operations Update
for Q1 2026. 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:

"The conflict in the Middle East has created unprecedented disruption to
energy markets, restricting oil and gas flows and driving significant price
volatility. Against this backdrop, we remain focused on playing our part in
delivering the oil and gas the world needs, safely and efficiently.

"Strong operational reliability and execution across our portfolio enabled
us to deliver more than half a million barrels of oil and gas per day in the
first quarter. We also completed the acquisition of LLOG in the US and made
good progress on our pipeline of active and future project developments.

"Our strong first quarter has allowed us to narrow upwards our production
guidance for the full year and, supported by the current commodity price
environment, increase our free cash flow outlook for 2026. As a result, we see
the potential for accelerated debt reduction while maintaining competitive
shareholder returns and disciplined investment in our portfolio, in line with
our capital allocation framework."

Strong operational delivery

§ Production of 506 kboepd (Q1 2025: 500 kboepd), split 40% liquids, 40%
European gas, 20% other gas

-    Two months' contribution from the US Gulf of America (GoA) with the
LLOG acquisition completed ahead of schedule on 11 February, offsetting the
decline in the UK and divestment of Vietnam

-   Norway outperformance benefitting from high reliability across key hubs,
good delivery from the latest Njord well and strong reservoir performance at
the Harbour operated Gjøa satellite fields

-    New projects and wells onstream in the US, Norway, Argentina and Egypt

-    Successful completion of planned maintenance in March in the GoA

§ Unit operating costs of $12.8/boe (Q1 2025: $13/boe)

§ Total recordable injury rate (TRIR) of 1.3 per million hours worked (Q1
2025: 1.1); greenhouse gas intensity estimated at 13 kgCO(2)/boe (Q1 2025: 13
kgCO(2)/boe)(1)

§ High return, short cycle infrastructure-led investments progressed

-    Norway: Production due to start-up at Dvalin North in Q3 and Irpa by
year end; first gas from Alve Nord and Idun Nord accelerated into 2026

-   UK: Farm in for 45% interest in the Ithaca operated Fotla oil and gas
discovery; FID of the two well development via the Harbour operated GBA hub
targeted by year end

-    US: FID of the Who Dat East development targeted for Q3; second rig
contracted and due to arrive before year end, accelerating high return
drilling and completion activity

-    Argentina: Multi-pad drilling at APE (Vaca Muerta gas licence) with
nine wells to be connected in 2026

-    Egypt: Development of Fayoum-Messinian via West Nile Delta commenced;
first gas expected end 2026

§ Exploration and appraisal success, including in Norway with the Omega Sør
discovery close to the Snorre field which is being fast-tracked for
development by the operator and in Egypt with the successful appraisal of the
EZZ discovery at Disouq

§ Carbon Capture and Storage (CCS) projects in Denmark advanced with the
Greensand Future project on track to commence commercial operations around
year end and a large onshore 3D seismic survey successfully completed at the
Harbour operated Greenstore project

Continued strategic delivery

§ Growth projects advanced, supporting future reserves replacement and
portfolio optionality

-   Mexico: At our operated Zama and Kan projects, progress centred on
optimising development concepts ahead of entering FEED later this year; post
period end agreed divestment of 5% interest in Zama to a subsidiary of Grupo
Carso for $75.25 million (structured as a carry of Harbour’s future capital
investment), increasing the stake of a strong strategic partner with Harbour
retaining a 27.3% interest

-   Argentina: Southern Energy on track to start up end 2027, marking the
country's first LNG export project. Refurbishment of the first liquefaction
vessel and conversion of the second is progressing, an eight year 2 mtpa
offtake agreement was signed with SEFE, and EPC contracts for the dedicated
Vaca Muerta pipeline and compression plant were recently awarded

§ Awarded nine exploration licences (four as operator) in the 2025 Norway APA
licensing round and 10 leases (all as operator) in the GoA Big Beautiful Gulf
1 and 2 bid rounds

§ Strategic transactions on track, further strengthening our portfolio and
free cash flow outlook

-    US: LLOG acquisition ($3.2 billion) completed ahead of schedule in
February, marking Harbour's entry into the GoA at scale, securing a fully
operated, oil weighted portfolio with long reserve life and compelling growth;
integration of LLOG is progressing well

-    Indonesia: Divestments ($215 million) expected to complete later this
quarter, improving portfolio quality and accelerating value

-   UK: Acquisition of Waldorf ($170 million) on track to complete around
mid-year, delivering significant financial synergies and supporting the
resilience and longevity of Harbour's UK business

Significant free cash flow generation, accelerating debt reduction

§ Q1 revenue of $3.0 billion (Q1 2025: $2.8 billion), reflecting realised
post-hedge oil and European gas prices of $76/bbl and $14.8/mscf, respectively
(Q1 2025: $74/bbl and $13.9/mscf)

-    Pre-hedge, we realised oil and European gas prices of $79/bbl and
$14.7/mscf during Q1

-    Post period end in April the difference between Dated Brent (which
most of our crude is priced against) and the front month ICE Brent future
increased to $18/bbl versus $3/bbl in Q1 2026

§ Total capital expenditure for the period of $0.5 billion (Q1 2025: $0.5
billion)

§ Q1 free cash flow of $0.7 billion (Q1 2025: $0.7 billion)(2). This reflects
strong operational performance and the Q2-Q4 weighting of capex and tax
payments, partly offset by a $0.2 billion negative working capital build due
to the step up in commodity prices in March

§ Net debt (pre-swap) increased to $6.3 billion at 31 March 2026 (31 December
2025: $4.4 billion), driven by the $2.7 billion cash consideration for the
LLOG acquisition partly offset by strong free cash flow generation over the
period

§ Post period end in April we used cash on balance sheet to repay the c.$240
million October 2026 bond maturity and, in May, repaid the remaining drawn
balance under the Revolving Credit Facility

§ Investment grade credit ratings of Baa2 (negative outlook), BBB- (stable
outlook) and BBB- (stable outlook) confirmed by Moody's, Fitch and S&P,
respectively

§ Secured additional hedges in March, mainly through zero cost collars,
including for Q2-Q4 2026:

-    c.19 kboepd of European gas hedges with a weighted average price floor
of $16.5/mscf and a weighted average price cap of $26.5/mscf

-    c.12 kboepd of oil (Brent and WTI) hedges with a weighted average
price floor of $68/bbl and a weighted average price cap of $105/bbl (full
hedging schedule in appendix)

§ As previously announced, proposed 2025 final dividend of 8.05 cents/voting
ordinary share ($150 million(3)) to be paid on 20 May 2026, in line with
Harbour's distributions policy

Improved 2026 production guidance and free cash flow outlook(4)

§ Full year production guidance narrowed upwards to 480-500 kboepd (475-500
kboepd previously), reflecting strong year-to-date performance (including 520
kboepd in April) and ahead of planned UK and Norway maintenance programmes

§ Full year operating cost forecast unchanged at c.$14.5/boe

 

§ Expected total capital expenditure of $2.2-$2.4 billion reiterated

§ Assuming $80/bbl Dated Brent and $13/mscf European gas prices for 2026,
full year free cash flow outlook is increased to $1.4 billion (previously $0.6
billion at $65/bbl and $11/mscf)

-    In line with our distributions policy, and assuming the lower end of
the free cash flow payout range of 45-75%, this would result in shareholder
distributions of c.$0.6 billion with respect to 2026 and c.$0.8 billion
allocated towards debt reduction

-    Consistent with our stated 2026 free cash flow sensitivity: A $5/bbl
change in Dated Brent or $1/mscf change in European gas prices for the full
year impacts our 2026 free cash flow by c.$170 million or c.$150 million,
respectively(5)

 

 

Enquiries

Harbour Energy
plc
+44 (0) 203 833 2421

Elizabeth Brooks, SVP Investor Relations

Andy Norman, SVP Communications

Email: CorporateExternalCommunications@harbourenergy.com

 

 

Appendix:

 

 

Group production

 

                 Q1 2026                      Q1 2025

                 (working interest, kboepd)   (working interest, kboepd)
 Norway          181                          180
 UK              153                          165
 Argentina       72                           74
 US              23(1)                        -
 Mexico          10                           10
 North Africa    32                           33
 Germany         29                           29
 Southeast Asia  6                            9
 Total Group     506                          500

     (1)Reflects LLOG production contributing from 1 February, averaged
over Q1

 

 

Hedging schedule

 

              Q2 -Q4 2026                       Full Year 2027                     Full Year 2028
              Transacted Volume  Average Price  Transacted Volume  Average Price  Transacted Volume  Average Price
 EU/UK gas    mmboe              $/mscf         mmboe              $/mscf         mmboe              $/mscf
 Swaps        16.6               11.0           7.4                10.3           2.5                8.7
 Collars      7.8                11.7-20.0      10.4               8.8-15.6       2.1                8.1-14.9

 (put-call)
 Group        24.5               13.0           17.8               12.4           4.6                8.5
 Brent/WTI    mmbbl              $/bbl          mmbbl              $/bbl          mmbbl              $/bbl
 Swaps        12.2               72             3.1                67             1.6                65
 Collars      5.2                64-91          11.0               59-79          3.5                58-76

 (put-call)
 Group        17.4               77             14.1               75             5.1                71

As at 31 March 2026. Owing to rounding, totals do not match the sum of the
component parts. Reflects transacted volumes rather than post tax / economic
exposure. Collar ranges reflect the volume weighted average of put and call
options respectively. Group totals reflect volume weighted average of traded
swap/fixed price and, for collar structures, the forward curve at 31 March
2026 if forward curve pricing is between the cap and the floor or the
floor/cap price if forward curve pricing is outside collar range.

 

 

 Realised post-hedge pricing

                                      Q1 2026  Q1 2025
 Oil ($/bbl)                          76       74
 NGLs ($/bbl)                         55       52
 Liquids (oil and NGLs) ($/bbl)       73       70
 European gas (includes UK) ($/mscf)  14.8     13.9
 Other gas ($/mscf)                   3.4      3.4

 

(1) Scope 1 and 2 emissions on a net equity share basis

(2) Free cash flow (FCF) after capex, tax and before M&A/divestment
proceeds and transaction costs, hybrid bond interest, debt   repayment and
shareholder distributions

(3) Includes $23 million dividend paid on non-voting ordinary shares

(4) 2026 includes the impact of the LLOG acquisition and assumes completion of
the Indonesia and Waldorf (UK) transactions end Q2 2026. 2026 guidance assumes
a USD to GBP exchange rate of $1.35/£, USD to EUR exchange rate of $1.15/€
and a Norwegian NOK to USD exchange rate of NOK10/$

(5) Free cash flow (FCF) after capex, tax and before M&A/divestment
proceeds and transaction costs, hybrid bond interest, debt   repayment and
shareholder distributions. In both cases 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

 

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