TIDMHBR
RNS Number : 2811K
Harbour Energy PLC
24 August 2023
Harbour Energy plc
Half-year results for the six months to 30 June 2023
24 August 2023
Harbour Energy plc ("Harbour" or the "Company" or the "Group")
today announces its unaudited half-year results for the six months
ended 30 June 2023.
Operational highlights
* Production of 196 kboepd (H1 2022: 211 kboepd), in
line with guidance and split equally between liquids
and natural gas
* Unit operating costs of $15/boe (H1 2022: $14/boe)
* Strong safety record: TRIR of 0.8 per million hours
worked (H1 2022: 0.7)
* Portfolio diversification progressed:
* Zama (Mexico) unit development plan approved by the
regulator
* Kan-1 oil discovery (Mexico); appraisal planning
underway
* Following the Timpan-1 discovery in 2022, a
multi-well Andaman Sea (Indonesia) exploration
campaign to commence in October
* Viking and Acorn CO(2) capture and storage (CCS)
projects awarded Track 2 status by the UK government,
an important milestone towards potential final
investment decisions
Financial highlights(1)
* EBITDAX of $1.4 billion (H1 2022: $2.0 billion)
* Profit before tax of $0.4 billion (H1 2022: $1.5
billion); loss after tax of $8 million (H1 2022:
profit of $1.0 billion) driven by a higher UK tax
rate and one-off tax charges
* Free cash flow (post-tax, pre-distributions) of $1.0
billion (H1 2022: $1.4 billion)
* Zero net debt at period end, reduced from $0.8
billion at year-end 2022 and $2.9 billion at
completion of the Premier Oil merger in April 2021
* Total announced shareholder returns of c.$1 billion
since December 2021, including:
* $200 million share buyback announced in March of
which c.$160 million completed(2)
* $100 million (12 cents per share) interim dividend
declared, in line with $200 million annual dividend
policy and representing nine per cent dividend per
share growth year-on-year
2023 Guidance
* Production guidance narrowed to 185-195 kboepd
(185-200 kboepd previously)
* Opex of c.$16/boe(3) reiterated, reflecting strong
cost control offset by stronger sterling
* Total capex reduced from $1.1 billion to $1.0 billion
due to deferral and phasing of capex
* Forecast free cash flow (post-tax, pre-distributions)
unchanged at c.$1.0 billion with lower commodity
prices, especially UK natural gas prices, offset by
reduced capex and positive working capital movements
* Forecast year-end net debt of c.$0.2 billion, due to
phasing of capex and timing of tax payments; forecast
to be net debt free in H1 2024(4)
(1) See Glossary for the definition of non-IFRS measures used
in this section.
(2) Total buyback value completed as at 23 August 2023.
(3) 2023 full year sterling to US dollar exchange rate forecast
increased to $1.25/GBP from $1.2/GBP.
(4) Assumes Brent averages $80/bbl, UK NBP averages 100 pence/therm
and sterling averages $1.25/GBP for full year 2023 and 2024. Prior
free cash flow forecast of $1 billion assumed $85/bbl, 150 pence/therm
and $1.2/GBP for 2023.
Linda Z Cook, Chief Executive Officer, commented:
"We remain focused on maximising the value of our UK oil and gas
portfolio, advancing our organic development projects and
disciplined capital allocation. This has allowed us to continue to
generate significant free cash flow supporting material shareholder
distributions while maintaining capacity for meaningful but
disciplined M&A. We have also progressed our strategic
investment opportunities outside of UK oil and gas - in Indonesia,
in Mexico and in CCS. These have the potential to materially
increase our reserve life, support shareholder returns and
diversify our company over time."
Enquiries
Harbour Energy plc
+44 20 3833
Elizabeth Brooks, Head of Investor Relations 2421
Brunswick
+44 20 7404
Patrick Handley, Will Medvei 5959
Notes to editors
In August, we agreed the sale of our Vietnam business and are
targeting completion by year-end 2023. Our 2023 forecasts and
guidance reflect the assumption that we will continue to recognise
the results of our Vietnam business in our financial statements up
until year-end.
Production, reserves and resources are reported on a net working
interest basis unless otherwise stated.
Summary of 2023 half-year performance
Robust operating performance
Production averaged 196 kboepd (H1 2022: 211 kboepd), in line
with guidance and split equally between liquids and gas.
This reflects contributions from new wells at our operated
Tolmount and J-Area hubs in the UK offset by natural decline. 2023
production guidance is narrowed to 185-195 kboepd, reflecting
delays and deferrals of drilling at partner-operated hubs,
primarily Beryl.
Operating costs for the first half were $0.5 billion (H1 2022:
$0.5 billion), driven by strong cost control in an inflationary
environment and a weaker sterling to the US dollar exchange rate.
On a unit of production basis, operating costs were $15/boe (H1
2022: $14/boe), higher than the prior period because of lower
volumes. Forecast unit operating costs on a full year basis are
unchanged at c.$16/boe(1) .
Total capital expenditure for the period was $0.4 billion.
Forecast total capital expenditure on a full year basis is reduced
from $1.1 billion to $1 billion. This reduction is driven by some
capex now falling in 2024 due to the delayed arrival of rigs,
primarily at Andaman and the Greater Britannia Area, as well as the
deferral of the subsea and platform drilling campaigns at
Beryl.
Harbour has continued to build a strong safety culture with no
serious injuries or significant spills recorded during the period.
In the first half of 2023, our total recordable injury rate was 0.8
per million hours (H1 2022: 0.7) with c. five million hours
worked.
We continue to leverage our operational control and scale to
realise cost savings including through our supply chain. In
response to the Energy Profits Levy (EPL) in the UK, we scaled back
our activities in certain areas and acted decisively to manage our
cost structure. This included a review of our UK organisation,
which is expected to deliver annual savings of c.$50 million from
2024, following a $16 million one-off charge taken in our half-year
financial statements.
Maximising the value of our production base
We seek to maximise the value of our production base, including
in the UK where Harbour today is the largest producer and supplies
c.15 per cent of the UK's domestic oil and gas. While the EPL has
impacted our activity levels in the UK, we continue to undertake
targeted investment in high return, infrastructure-led
opportunities which improve recovery, extend field life and support
production and cash flow generation.
Within our operated portfolio, this included development
drilling at Tolmount East, where first gas is now expected around
year-end, and at Talbot, a multi-well subsea tieback to our
operated Judy platform, where production start-up is scheduled for
around the end of 2024. We are also appraising the Leverett gas
discovery which, if successful, could be developed as a subsea
tie-back to Harbour's operated Britannia infrastructure. Most
recently, we approved drilling on North West Seymour in 2024 which,
together with plant modifications, has the potential to extend
Armada's producing life to 2030.
In our partner-operated portfolio, Beryl production was boosted
by initial high rates from two new wells online in the second
quarter. However, the outlook for production on a full year basis
is materially impacted by the delay to those wells coming online
and the decision by the operator to pause further subsea and
platform drilling. Other non-operated activity during the period
included the start of development drilling at Buzzard Northern
Terrace, a return to platform drilling at Clair Phase 1, ongoing
development drilling at Clair Ridge and the commencement of a
three-well subsea drilling campaign at Schiehallion.
1 This assumes a 2023 sterling to US dollar exchange rate of
$1.25/GBP (increased from $1.2/GBP previously)
Diversifying our asset base: good progress in Mexico and
Indonesia
We made good progress maturing our portfolio of international
growth opportunities. These have the potential to diversify our
company and materially increase our reserve life.
In Mexico, the unit development plan (UDP) for the Zama oil
field (Harbour 12 per cent non-operated interest) was finalised and
approved by the regulator in June and the partners have formed an
Integrated Project Team to manage the delivery of the development.
Preparations are underway to commence FEED and refresh cost
estimates ahead of a potential final investment decision in 2024.
This would result in approximately 75 mmboe of our 2C resources
moving into 2P reserves, replacing over a year's worth of Harbour's
current production.
Also in Mexico, the drilling of the Kan-1 exploration well on
Block 30 (Harbour 30 per cent non-operated interest) resulted in an
oil discovery in April. Preliminary estimates suggest 200-300
mmbbls of oil in place (gross). A plan to appraise the discovery in
2024 is expected to be submitted to the regulator in the third
quarter of 2023. The Block 30 consortium decided to abandon
drilling at the second commitment well, Ix-1EXP, before reaching
the main target due to operational issues. The well has been
plugged and abandoned.
In Indonesia, Harbour and its partners progressed plans to
return to drilling in the Andaman Sea, expected to begin in October
2023. This follows the 2022 Timpan gas discovery on the Andaman II
licence which added 80 mmboe net of 2C resource and de-risked a
potential multi-TCF play. The campaign, which includes at least
four wells, aims to demonstrate the commercial viability of a
development on the Andaman II licence and to test the extension of
the play into South Andaman. The first well will target the Layaran
prospect on the Mubadala-operated South Andaman licence (Harbour 20
per cent interest) followed by drilling the Halwa and Gayo
prospects on Andaman II (Harbour 40 per cent operated interest).
The rig will then return to South Andaman to drill a fourth well,
the location of which will be confirmed following the outcome at
Layaran.
Elsewhere in Indonesia, we are working to progress the approved
field development plan for our Tuna discovery which has been
impacted by EU/UK sanctions. We continue to have constructive
discussions with our Russian partner and the Indonesian government
to reach a solution but do not anticipate being able to commence
FEED until next year, which would mean a potential final investment
decision being made in 2025.
Investing in CCS to enable the energy transition
We have seen significant momentum on our two UK CCS projects
which have the potential to deliver a long term, stable income
stream for Harbour. Our operated Viking CCS project where we are
partnered with bp and the Acorn CCS project in which we are a 30
per cent partner were awarded Track 2 status as part of the UK
Government's CCS cluster sequencing process in July. This marked an
important milestone for the two projects, allowing them to move to
FEED and discussions with the UK Government over the terms of the
economic licences ahead of potential final investment
decisions.
Through early commercial agreements with emitters, Viking has
line of sight to store up to 10 mtpa of CO(2) by 2030 and 15 mtpa
by 2035. As a result, Viking ranks as one of the largest planned
CCS projects in the world and has a vital role to play in
supporting the UK to meet its CO(2) capture target of 20-30 mtpa by
2030. Further, through our relationship with Associated British
Ports (ABP), Viking has the potential to provide storage for
shipped emissions from Europe. This, together with potential
project financing, offers the potential for enhanced financial
returns on capital invested.
The first half of the year also saw the independent
certification by ERCE of Viking's 300 million tonnes of CO(2)
storage capacity, the first project in the UK and we believe only
the third in the world to have done so. We also successfully
participated in the UK's first CCS licensing round with our partner
bp and have been offered two CCS licences adjacent to our existing
Viking licence, potentially adding to the material storage resource
of the project.
Harbour seeks to responsibly decommission retired oil and gas
infrastructure where it is not possible to repurpose it for use in
CCS projects. During the first half of 2023, our decommissioning
team continued to deliver a strong safety and environmental
performance. In the Southern North Sea, we successfully plugged and
abandoned four wells and prepared two platforms for removal and
recycling later in the year, while in the Central North Sea we
commenced an extensive subsea removal and well P&A preparation
campaign at the MacCulloch, Huntington and Balmoral areas.
Active portfolio management
Harbour continues to actively manage its portfolio, allocating
its capital and resources to its best investment opportunities
aligned to its strategy. Since completing the merger with Premier
Oil in April 2021, Harbour has exited the Sea Lion development in
the Falkland Islands and Brazil exploration licences, high-graded
its UK 2C portfolio, progressed the Zama development in Mexico,
appraised the Tuna discovery in Indonesia, advanced its two CCS
projects in the UK, and made new discoveries in the Andaman Sea in
Indonesia and on Block 30 in Mexico. Most recently, in August we
announced the sale of our business in Vietnam for $84 million.
Completion of the divestment is targeted by year-end 2023, and will
result in a country exit from Vietnam for Harbour.
Strong financial position and disciplined capital allocation
During the first six months of the year, Harbour generated
significant free cash flow of $1.0 billion, despite the lower
commodity price environment, especially for UK natural gas, and
reduced oil production volumes. Our cash flow generation, which is
heavily first-half weighted due to phasing of capex and tax
payments, has enabled the Company to end the period with zero net
debt.
At the end of June, we completed the annual redetermination of
our reserve-based lending (RBL) facility with the new borrowing
base availability set at $1.1 billion compared to $2.7 billion
previously, reflecting the full impact of the EPL. As at period
end, Harbour's liquidity stood at c.$1.6 billion comprising an
undrawn RBL and $0.5 billion of cash. As part of the
redetermination, we amended the oil and gas price hedging
requirements which are now linked to the amount drawn under the
borrowing base. This means that while we remain under 10 per cent
drawn there are no minimum hedging requirements on our business.
Approximately 50 per cent of our 2023 production is hedged -
comprising 64 per cent of our gas production and 33 per cent of our
liquids production - due to historical hedging requirements.
In line with our $200 million annual dividend policy, we paid a
$99 million(1) final dividend in respect of the 2022 financial year
in May and have declared an interim dividend for 2023 of $100
million equating to 12 cents/share. This reflects dividend per
share growth of nine per cent year-on-year. In March, we initiated
a new $200 million buyback programme and, as at 23 August, the
programme was c.80 per cent complete.
Since completion of the merger with Premier in April 2021, we
have reduced our net debt by c.$2.9 billion and announced c.$1
billion of shareholder returns.
Outlook for 2023
We enter the second half of the year in a strong position
supported by a cash generative asset base, a robust balance sheet,
disciplined capital allocation and a prudent approach to risk
management.
At $80/bbl and 100p/therm average prices for the full year, we
anticipate generating free cash flow of $1 billion during the year
and to close 2023 in a small net debt position. This reflects over
$400 million of tax payments and an increase in capital expenditure
in the second half of the year. We expect to be net debt free in
the first half of 2024(2) , retaining significant optionality over
our capital allocation. We will continue to return any excess
capital to shareholders while investing in our existing portfolio
to ensure a resilient and sustainable business and maintaining
capacity for meaningful but disciplined M&A.
1 Difference to the final dividend value declared of $100
million, is due to FX adjustments on sterling denominated shares at
the date of payment.
2 Assumes Brent averages $80/bbl, UK NBP averages 100
pence/therm and sterling averages $1.25/GBP for full year 2023 and
2024.
Financial Review
Summary of financial results
Analysis of these key metrics are discussed in detail across the
following pages of the Financial Review.
6 months 6 months
ended ended
30 June 2023 30 June 2022
Unaudited Unaudited
============================================= ============== ==============
Production and post-hedging realised prices
============================================= ============== ==============
Production - kboepd 196 211
============================================= ============== ==============
Crude oil - $/boe 76 82
============================================= ============== ==============
UK natural gas - p/therm 58 69
============================================= ============== ==============
Indonesia natural gas - $/mscf 12 16
============================================= ============== ==============
Income statement
============================================= ============== ==============
Revenue and other income - $ million 2,016 2,670
============================================= ============== ==============
EBITDAX(1) - $ million 1,428 2,024
============================================= ============== ==============
Profit before taxation - $ million 429 1,490
============================================= ============== ==============
(Loss)/profit after taxation - $ million (8) 984
============================================= ============== ==============
Basic (loss)/earnings per share - $/share (0.0) 1.1
============================================= ============== ==============
Other financial key figures
============================================= ============== ==============
Total capital expenditure(1) - $ million 434 391
============================================= ============== ==============
Operating cash flow - $ million 1,487 1,862
============================================= ============== ==============
Free cash flow(1) - $ million 1,046 1,353
============================================= ============== ==============
Shareholder returns paid(1) - $ million 246 140
============================================= ============== ==============
30 June 2023 31 Dec 2022
Unaudited Audited
============================================= ============== ==============
Net cash/(debt)(1) - $ million 1 (704)
============================================= ============== ==============
Leverage ratio(1) 0 0.2
============================================= ============== ==============
(1) See Glossary for the definition of non-IFRS measures.
Reconciliations between IFRS and non-IFRS measures are provided
within this review.
Income Statement
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
================================= ============== ==============
Revenue and other income 2,016 2,670
================================= ============== ==============
Cost of operations (1,224) (1,365)
================================= ============== ==============
EBITDAX 1,428 2,024
================================= ============== ==============
Operating profit 654 1,247
================================= ============== ==============
Profit before tax 429 1,490
================================= ============== ==============
Taxation (437) (506)
================================= ============== ==============
(Loss)/profit after tax (8) 984
================================= ============== ==============
$/share $/share
================================= ============== ==============
Basic (loss)/earnings per share (0.0) 1.1
================================= ============== ==============
Revenue and other income
Total revenue and other income decreased to $2,016 million (H1
2022: $2,670 million). This was driven by lower post-hedging
realised prices and a reduction in liquid production volumes
compared to H1 2022.
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
================================= ============== ==============
Revenue and other income 2,016 2,670
================================= ============== ==============
Crude 1,115 1,542
================================= ============== ==============
Gas 759 970
================================= ============== ==============
Condensate 100 129
================================= ============== ==============
Tariff income and other revenue 17 18
================================= ============== ==============
Other income 25 11
================================= ============== ==============
Revenue earned from hydrocarbon production activities decreased
to $1,991 million (H1 2022: $2,659 million) after realised hedging
losses of $486 million (H1 2022: $1,603 million). This was driven
by lower oil production and commodity prices, especially UK natural
gas prices.
Crude oil sales decreased to $1,115 million (H1 2022: $1,542
million), with a realised post-hedging oil price of $76/bbl (H1
2022: $82/bbl).
Gas revenue was $759 million (H1 2022: $970 million), split
between UK natural gas revenue of $699 million (H1 2022: $857
million) and international gas revenue of $60 million (H1 2022:
$113 million). The realised post-hedging price for our UK and
Indonesia gas was 58p/therm (H1 2022: 69p/therm) and $12/mscf (H1
2022: $16/mscf), respectively.
Other income amounted to $25 million (H1 2022: $11 million)
which includes partner recovery on related lease obligations and a
receipt related to the Viking CCS Development Agreement entered
into by Harbour in March 2023.
Cost of operations
Cost of operations decreased to $1,224 million (H1 2022: $1,365
million) driven by lower production volumes and a positive movement
in hydrocarbon inventories.
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
===================================================== ============== ==============
Operating costs
===================================================== ============== ==============
Field operating costs(1) 560 560
===================================================== ============== ==============
Tariff income (14) (18)
===================================================== ============== ==============
Total operating costs 546 542
===================================================== ============== ==============
Operating costs per barrel ($ per barrel)(2) 15.4 14.2
===================================================== ============== ==============
Movement in over/underlift balances and hydrocarbon
inventories (67) 34
===================================================== ============== ==============
Depreciation, depletion and amortisation (DD&A)
before impairment charges
===================================================== ============== ==============
Depreciation of oil and gas properties (cost
of operations only) 708 742
===================================================== ============== ==============
Depreciation of non-oil and gas properties 20 19
===================================================== ============== ==============
Amortisation of intangible assets - 1
===================================================== ============== ==============
Total DD&A 728 762
===================================================== ============== ==============
DD&A before impairment charges ($ per barrel)(2) 20.5 20.0
===================================================== ============== ==============
(1) Excludes non-cash depreciation on non-oil and gas assets. H1
2022 also includes mark-to-market losses of $1 million on EUA
emissions hedges.
(2) Non-IFRS measure - see Glossary for the definition.
Total operating costs were flat period on period at $546 million
(H1 2022: $542 million) driven by strong cost control in an
inflationary environment and a weaker sterling to the US dollar
exchange rate. Operating costs were higher on a unit of production
basis at $15.4/boe (H1 2022: $14.2/boe) due to lower production
volumes.
Depreciation, depletion and amortisation (DD&A) unit
expense, which reflects the capitalised costs of producing assets
divided by produced volumes, was $20.5/boe (H1 2022: $20.0/boe)
with the increase largely due to lower production volumes.
EBITDAX
EBITDAX was $1,428 million (H1 2022: $2,024 million), with the
reduction driven primarily by lower revenue.
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
============================================= ============== ==============
Operating profit 654 1,247
============================================= ============== ==============
Depreciation, depletion and amortisation 728 762
============================================= ============== ==============
Impairment of property, plant and equipment 18 3
============================================= ============== ==============
Exploration and evaluation expenditure, and
new ventures 15 20
============================================= ============== ==============
Exploration costs written-off 13 2
============================================= ============== ==============
Gain on disposal - (10)
============================================= ============== ==============
EBITDAX(1) 1,428 2,024
============================================= ============== ==============
(1) Non-IFRS measure - see Glossary for the definition.
The Group has recognised a net pre-tax impairment charge of $18
million (H1 2022: $3 million) on two assets in the UK North Sea,
one driven primarily by a significant reduction in the gas price
outlook compared to the 2022 year-end view and the other by a
revised decommissioning cost profile.
During the period, the Group expensed $28 million (H1 2022: $22
million) for exploration and appraisal activities. This includes
exploration write-off expense of $13 million (H1 2022: $2 million)
mainly in relation to the Ix-1EXP well in Mexico, $15 million (H1
2022: $20 million) related to pre-development costs of which $11
million (H1 2022: $10 million) was associated with our UK CCS and
electrification projects, and $4 million (H1 2022: $10 million of
ongoing pre-licence expenditure.
Net financing costs
Finance income amounted to $33 million (H1 2022: $397 million).
The reduction is mainly due to unrealised foreign exchange gains of
$360 million in the six months to 30 June 2022 which predominately
arose on the revaluation of open sterling denominated gas hedges as
a result of the weakening of sterling against the US dollar in the
period.
Financing expenses totalled $258 million (H1 2022: $155
million). This included interest expenses incurred on debt
facilities of $25 million (H1 2022: $48 million), the reduction
reflecting the impact of lower outstanding debt partially offset by
higher interest rates. Other financing expenses include the
unwinding of the discount on provisions, primarily associated with
future decommissioning obligations, of $74 million (H1 2022: $32
million), bank and financing fees of $48 million (H1 2022: $39
million) and $85 million foreign exchange losses as a result of the
strengthening of sterling since year end (H1 2022: $360 million of
foreign exchange gains).
Earnings and taxation
Loss after tax amounted to $8 million (H1 2022: profit of $984
million). This resulted in a loss per share of $nil (H1 2022:
earnings per share of $1.1) after taking into account the weighted
average number of ordinary shares in issue of 829 million (H1 2022:
925 million) following the share buyback programme.
Harbour's tax expense decreased in H1 2023 to $437 million (H1
2022: $506 million). This reflects lower taxable profits as a
result of lower revenue offset by the increased tax burden from the
EPL. The tax expense is split between a current tax expense of $413
million (H1 2022: $348 million), which includes an EPL current tax
charge of $302 million (H1 2022: $nil), and a deferred tax expense
of $25 million (H1 2022: $158 million).
The effective tax rate is 102 per cent (H1 2022: 34 per cent),
materially higher than the statutory UK tax rate of 75 per cent (H1
2022: 40 per cent) as a result of several period specific
adjustments. If these items had not arisen then we would have
expected the effective tax rate for the period to be 79 per
cent.
Shareholder distributions
A final dividend with respect to 2022 of 12 cents per ordinary
share was proposed on 9 March 2023 and approved by shareholders at
the AGM on 10 May 2023. The dividend was paid on 24 May 2023 to all
shareholders on the register as at 14 April 2023, totalling $99
million(1) .
In line with the Company's dividend policy, the Board is pleased
to announce an interim dividend of 12 cents per ordinary share to
be paid on 18 October 2023 to all shareholders on the register on 8
September 2023 (the "Record Date"). A dividend re-investment plan
("DRIP") is available to shareholders who would prefer to invest
their dividend in the shares of the Company. To participate in the
DRIP, shareholders must submit their election notice to Equiniti,
the Company's Registrar, by 27 September 2023 (the "Election
Date").
In addition to these dividend payments, the Board approved a
$200 million share buyback scheme on 9 March 2023. An irrevocable
non-discretionary agreement has been entered into with the
Company's corporate brokers to execute the programme on the
Company's behalf. The purpose of the programme is to reduce the
Company's share capital and all ordinary shares purchased as part
of this programme will be cancelled.
1 Difference to the final dividend value declared of $100
million, is due to FX adjustments on sterling denominated shares at
the date of payment.
During the first half of 2023, we repurchased 46 million of our
own shares at a cost of $150.7 million(1) (H1 2022: $53.5 million),
equating to 5.4 per cent of our issued share capital. Between 1
July 2023 to 23 August 2023, the Company had repurchased a further
17 million shares at a cost of $56 million. A further c.$40 million
is still to be repurchased through 2023, with the current programme
to be complete no later than 31 December 2023. Any purchases of
ordinary shares by the Company in relation to this announcement
will be conducted in accordance with the relevant regulations
(including but not limited to the Listing Rules) and Harbour's
general authority to repurchase shares, a renewal of which was
granted at the Company's AGM in May 2023.
Statement of Financial Position
30 June 2023 31 Dec 2022
$million $million
Unaudited Audited
============================================== ============= ============
Assets
============================================== ============= ============
Non-current assets, excluding deferred taxes 8,790 9,032
============================================== ============= ============
Deferred tax assets 381 1,407
============================================== ============= ============
Current assets 1,654 2,127
============================================== ============= ============
Total assets 10,825 12,566
============================================== ============= ============
Liabilities and Equity
============================================== ============= ============
Borrowings net of transaction fees 515 1,238
============================================== ============= ============
Decommissioning provisions 4,291 4,141
============================================== ============= ============
Deferred tax liabilities 1,062 397
============================================== ============= ============
Lease creditor 733 825
============================================== ============= ============
Derivative liabilities 1,254 3,451
============================================== ============= ============
Other liabilities 1,556 1,493
============================================== ============= ============
Total liabilities 9,411 11,545
============================================== ============= ============
Equity 1,414 1,021
============================================== ============= ============
Total liabilities and equity 10,825 12,566
============================================== ============= ============
Net cash/(debt) 1 (704)
============================================== ============= ============
Assets
The decrease in total assets of $1,741 million is mainly as a
result of a reduction in the deferred tax asset of $1,026 million,
lower right-of-use assets, which have reduced by $128 million and a
reduction in property, plant and equipment of $184 million,
partially offset by an increase to intangible assets of $75
million.
Liabilities
The reduction in total liabilities of $2,134 million is mainly
driven by a reduction in derivative liabilities of $2,197 million
following reductions to commodity prices in the period and a
reduction in borrowings of $723 million mainly related to the
repayment of the reserves-based lending (RBL) facility. The
decommissioning provision increase of $150 million was due to
changes in cost estimates used, the unwinding of discount and
currency translation adjustments, partially offset by spend in the
period.
The net deferred tax position on the balance sheet is a
liability of $681 million. This balance mainly reflects tax
expected to be paid on property, plant and equipment (PP&E) of
$3,298 million, along with deferred tax related to overseas
operations of $184 million, partially offset by future tax relief
available on decommissioning of $1,631 million, cash flow hedge
derivatives of $793 million and tax losses of $351 million.
1 Total spend on share buybacks includes transaction fees and
foreign exchange differences applied to the sterling denominated
shares repurchased.
Equity and reserves
Total equity increased mainly due to the gains in comprehensive
income related to favourable fair market value movements on cash
flow hedges of $2,185 million (Dec 2022: $269 million), gains on
currency translation of $91 million (Dec 2022: losses of $198
million), offset by movements in tax on cash flow hedges of $1,639
million (Dec 2022: gains of $1,006 million), share buybacks of $151
million and dividend payments of $99 million made in the period.
Retained earnings decreased by the loss after tax.
Net cash/(debt)
As at 30 June 2023, net cash of $1 million (Dec 2022: net debt
of $704 million) consisted of cash balances of $494 million (Dec
2022: $500 million) net of the $500 million bond (Dec 2022: $500
million) adjusted for unamortised fees of $7 million (Dec 2022: $9
million). Following net repayments of the RBL facility of $775
million and settlement in full of the exploration finance facility
(EFF) of $11 million, the RBL facility is $nil (Dec 2022: $775
million less unamortised fees of $73 million) and the EFF $nil (Dec
2022: $11 million). The remaining $51 million unamortised fees for
the RBL have been reclassified to debtors.
Available liquidity, being the undrawn RBL facility plus cash
balances, was $1.6 billion at the end of the period compared with
$2.5 billion at year end.
Derivative financial instruments
We carry out hedging activity to manage commodity price risk, to
ensure we comply with the requirements of the RBL facility and to
ensure there is sufficient funding for future investments. We have
entered into a series of fixed-price sales agreements and a
financial hedging programme for both oil and gas, consisting of
swap and option instruments. Our future production volumes are
hedged under the physical and financial arrangements in place at 30
June 2023. These are set out in the following table. Hedges
realised to date are in respect of both crude oil and natural
gas.
The current hedging programme is shown below:
Hedge position H2 2023 2024 2025 2026
================================= ======== ===== ===== =====
Oil
================================= ======== ===== ===== =====
Volume hedged (mmboe) 6 7 4 -
================================= ======== ===== ===== =====
Average price hedged ($/bbl) 74 84 77 -
================================= ======== ===== ===== =====
UK natural gas
================================= ======== ===== ===== =====
Volume hedged (mmboe) 11 13 6 1
================================= ======== ===== ===== =====
Average priced hedged (p/therm) 41 74 97 107
================================= ======== ===== ===== =====
At 30 June 2023, our financial hedging programme on commodity
derivative instruments showed a pre-tax negative fair value of
$1,027 million (H1 2022: negative $6,807 million), with no
ineffectiveness charge to the income statement.
Statement of cash flows(1)
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
================================================ ============== ==============
Cash flow from operating activities after
tax 1,487 1,862
================================================ ============== ==============
Cash flow from investing activities - capital
investment (337) (325)
================================================ ============== ==============
Cash flow from investing activities - other 65 9
================================================ ============== ==============
Operating cash flow after investing activities 1,215 1,546
================================================ ============== ==============
Cash flow from financing activities(2) (169) (193)
================================================ ============== ==============
Free cash flow(3) 1,046 1,353
================================================ ============== ==============
Cash and cash equivalents 494 845
================================================ ============== ==============
(1) Table excludes financing activities related to debt
principal movements.
(2) Interest and lease payments only, excludes shareholder
distributions.
(3) Non-IFRS measure - see Glossary for the definition.
Net cash from operating activities after tax amounted to $1,487
million (H1 2022: $1,862 million) after accounting for positive
working capital movements, including realised but unsettled hedges,
of $173 million (H1 2022: $119 million). Capital investment was
$337 million (H1 2022: $325 million). Cash outflow from financing
activities on interest and lease payments was $169 million (H1
2022: $193 million).
Shareholder distributions consist of dividends paid of $99
million (H1 2022: $98 million) and $148 million (H1 2022: $42
million) related to the repurchase of Harbour's own shares.
Cash and cash equivalent balances were $494 million (H1 2022:
$845 million) at the end of the period.
6 months 6 months
ended ended
30 June 2023 30 June 2022
$million $million
Unaudited Unaudited
================================================ ============== ==============
Additions to oil and gas assets (256) (222)
================================================ ============== ==============
Additions to fixtures and fittings, office
equipment & IT software (14) (22)
================================================ ============== ==============
Additions to exploration and evaluation assets (56) (53)
================================================ ============== ==============
Total capital investment(1) (326) (297)
================================================ ============== ==============
Decrease in working capital (20) (41)
================================================ ============== ==============
Capitalised lease payments 9 13
================================================ ============== ==============
Cash capital investment per the cash flow
statement (337) (325)
================================================ ============== ==============
(1) Non-IFRS measure - see Glossary for the definition.
During the period, the Group incurred total capital
expenditure(1) of $434 million (H1 2022: $391 million), split by
capital investment $326 million (H1 2022: $297 million) and
decommissioning spend $108 million (H1 2022: $94 million)
respectively.
The capital investment mainly consisted of development drilling
on Talbot and Tolmount, for operated assets, and Buzzard and Clair,
for non-operated assets.
The Group received net tax refunds of $22.7 million in the
period (H1 2022: $163.3 million payment) as UK tax refunds from
prior years offset the international tax payments made. Ordinarily
we would make a final 2022 UK tax instalment payment in January
2023, however as a result of a clarification from the UK Tax
Authorities on the payment timing for EPL liabilities for certain
subsidiaries we had an overpayment at year-end which was
reallocated to shelter this payment.
Principal risks
There are no significant changes to the headline principal risks
from those disclosed in the 2022 Annual Report and Accounts, as
discussed in the Risk and Uncertainties section below. A full
description of Harbour's principal risks can be found on pages 54
to 59 of the 2022 Annual Report and Accounts.
Post balance sheet events
On 10 August 2023 Harbour entered into Sale and Purchase
Agreements to sell its business in Vietnam, which includes its
53.125 per cent interest in the Chim Sáo and Dua producing fields,
to Big Energy Joint Stock Company for a consideration of $84
million. The transaction, which is subject to government approvals,
has an effective date of 1 January 2023. Completion is targeted by
year end 2023. The divestment results in a country exit from
Vietnam for Harbour.
Going concern
The results have been presented on a going concern basis. Detail
of the Group's assessment of going concern for the period can be
found within note 2.
Risks and Uncertainties
Business risks
Harbour faces various risks that could result in events or
circumstances that might negatively impact the Company's business
model, its future performance, liquidity, and reputation. Not all
of these risks are wholly within the Company's control and the
Company may also be affected by risks which have not yet
materialised or are not reasonably foreseeable.
The effective management of risk is critical if we are to
continue to successfully execute the strategy we set in 2021, and
to protect our personnel, assets, the communities with whom we
interact, and our reputation.
For known risks facing the business, the Company seeks to reduce
the likelihood and mitigate the impact of the risk to within the
level of appetite or tolerance set by the Board. According to the
nature of the risk, the Company can choose to take or tolerate
risk, treat risk with mitigating actions, transfer risk to third
parties, or terminate risk by ceasing particular activities or
operations. In particular, the Company has a zero tolerance stance
to fraud, bribery, corruption, and the facilitation of tax evasion.
We also aim to manage health, safety, and environmental and
security risks to a level as low as reasonably practicable.
Principal risks at half-year 2023 and key changes since the 2022
Annual Report
The directors have reviewed the principal risks facing the
Company and concluded the principal risks for the remaining six
months of the financial year are unchanged from those described in
the 2022 Annual Report and Accounts. To reach this conclusion, the
directors considered the changes in the external environment during
the recent period that could threaten the Company's business model,
future performance, liquidity, and reputation. The directors also
considered management's view of the current risks facing the
Company.
These principal risks are summarised as:
* Strategic execution: failure to effectively implement
the strategy
* Health, safety and environment: risk of a major
health, safety, environmental or physical security
incident
* Organisation and talent: failure to create and
maintain a cohesive organisation with sufficient
capability and capacity
* Host government political and fiscal risks: exposure
to adverse or uncertain political, regulatory or
fiscal developments in countries where the company
operates or maintains interests
* Operational performance: failure to deliver
competitive operational performance
* Capital programme and delivery: failure to define and
deliver a capital programme that optimises value
* Third-party reliance: failure to adequately manage
supply chain, joint venture and other partners, and
third-party infrastructure owners
* Access to capital: failure to ensure sufficient
access to capital to implement the company's strategy
* Commodity price exposure: failure to manage the
impact of commodity price fluctuations on the
business
* Energy transition and net zero: failure to adapt the
strategy and business model in the context of the
energy transition, including changing demand for oil
and gas, and evolving investor, societal and
regulatory expectations
* Cyber and information security: failure to maintain
safe, secure and reliable information systems
* Legal and regulatory compliance: failure to maintain
and demonstrate effective legal and regulatory
compliance
* Integration of acquired businesses: failure to
properly integrate acquired businesses and realise
anticipated synergies in a timely manner
In conducting their review, management and the Board identified
certain areas where changes in the external environment during the
period have increased uncertainty and the likelihood of some of
these risks materialising. These changes were mainly with respect
to access to capital citing a decline in lender appetite for new
investment in the oil and gas sector.
The detailed descriptions of the principal risks and how they
are being managed can be found on pages 54 to 59 in the 2022 Annual
Report and Accounts.
Insurance
We have significant and appropriate insurance in place to
minimise risk to our operational and investment programmes. This
includes business interruption insurance.
Responsibility statement
The directors confirm that, to the best of their knowledge:
* the condensed set of financial statements has been
prepared in accordance with UK-adopted IAS 34
'Interim Financial Reporting',
* the half-yearly results statement includes a fair
review of the information required by DTR 4.2.7R
(indication of important events during the first six
months and description of principal risks and
uncertainties for the remaining six months of the
year), and
* the half-yearly results statement includes a fair
review of the information required by DTR 4.2.8R
(disclosure of related parties' transactions and
changes therein).
By order of the Board,
Alexander Krane
Director
23 August 2023
Disclaimer
This statement contains certain forward-looking statements that
are subject to the usual risk factors and uncertainties associated
with the oil and gas exploration and production business. Whilst
Harbour believes the expectations reflected herein to be reasonable
in light of the information available to them at this time, the
actual outcome may be materially different owing to factors beyond
Harbour's control or within Harbour's control where, for example,
Harbour decides on a change of plan or strategy. Accordingly, no
reliance may be placed on the figures contained in such
forward-looking statements.
Independent review report to Harbour Energy plc
Conclusion
We have been engaged by the Company to review the condensed
consolidated set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 which
comprises the condensed consolidated income statement, the
condensed consolidated statement of comprehensive income, the
condensed consolidated balance sheet, the condensed consolidated
statement of changes in equity, the condensed consolidated
statement of cash flow and the related notes 1 to 18. We have read
the other information contained in the half-yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed
consolidated set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated set of
financial statements in the half-yearly financial report for the
six months ended 30 June 2023 is not prepared, in all material
respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. A review
of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with UK adopted international
accounting standards. The condensed consolidated set of financial
statements included in this half-yearly financial report has been
prepared in accordance with UK adopted International Accounting
Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
Conclusion section of this report, nothing has come to our
attention to suggest that management has inappropriately adopted
the going concern basis of accounting or that management has
identified material uncertainties relating to going concern that
are not appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing the Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the Company a conclusion on the
condensed consolidated set of financial statements in the
half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London, United Kingdom
23 August 2023
Financial Statements
Condensed consolidated income statement
For the six months ended 30 June
2023 2022
Unaudited Unaudited
Note $ million $ million
=========================================== ===== =========== ===========
Revenue 4 1,991.3 2,659.4
Other income 4 24.5 10.6
=========================================== ===== =========== ===========
Revenue and other income 2,015.8 2,670.0
Cost of operations 5 (1,224.3) (1,364.5)
Impairment of property, plant, and
equipment 10 (18.5) (2.6)
Exploration and evaluation expenses
and new ventures 5 (14.8) (20.4)
Exploration costs written-off 9 (13.3) (1.7)
Gain on disposal 5 - 10.0
General and administrative expenses 5 (91.2) (43.4)
=========================================== ===== =========== ===========
Operating profit 5 653.7 1,247.4
Finance income 6 33.2 396.9
Finance expenses 6 (257.8) (154.5)
=========================================== ===== =========== ===========
Profit before taxation 429.1 1,489.8
Income tax expense 7 (437.5) (505.7)
=========================================== ===== =========== ===========
(Loss)/profit for the period (8.4) 984.1
=========================================== ===== ===========
(Loss)/profit for the period attributable
to:
Equity owners of the company (8.4) 984.1
=========================================== ===== =========== ===========
(Loss)/earnings per share Note $ cents $ cents
=========================== ===== ======== ========
Basic 8 (1.0) 106.4
Diluted 8 (1.0) 105.7
=========================== ===== ======== ========
Condensed consolidated statement of comprehensive income
For the six months ended 30 June
2023 2022
Unaudited Unaudited
$ million $ million
================================================ =========== ===========
(Loss)/profit for the period (8.4) 984.1
Other comprehensive profit/(loss)
Items that may be reclassified to the income
statement (net of tax):
Fair value gains/(losses) on cash flow hedges 2,185.0 (3,348.9)
Tax (expense)/credit on cash flow hedges (1,638.7) 1,336.1
Exchange differences on translation 91.0 (107.6)
================================================ =========== ===========
Other comprehensive profit/(loss) for the
period, net of tax 637.3 (2,120.4)
===========
Total comprehensive profit/(loss) for the
period, net of tax 628.9 (1,136.3)
================================================ =========== ===========
Total comprehensive profit/(loss) attributable
to:
Equity owners of the company 628.9 (1,136.3)
================================================ =========== ===========
Condensed consolidated balance sheet
30 June 2023 31 Dec 2022
Unaudited Audited
Note $ million $ million
=============================== ===== ============= ============
Assets
Non-current assets
Goodwill 1,327.1 1,327.1
Other intangible assets 9 955.0 880.0
Property, plant and equipment 10 5,506.0 5,690.2
Right-of-use assets 11 607.2 734.7
Deferred tax assets 7 380.5 1,406.5
Other receivables 293.9 298.0
Other financial assets 14 101.2 102.7
=============================== ===== ============= ============
Total non-current assets 9,170.9 10,439.2
=============================== ===== ============= ============
Current assets
Inventories 174.2 142.9
Trade and other receivables 904.7 1,403.2
Other financial assets 14 81.4 80.8
Cash and cash equivalents 493.5 499.7
=============================== ===== ============= ============
Total current assets 1,653.8 2,126.6
=============================== ===== ============= ============
Total assets 10,824.7 12,565.8
=============================== ===== ============= ============
Equity and liabilities
Equity
Share capital 171.1 171.1
Other reserves 31.1 (606.2)
Retained earnings 1,211.5 1,456.4
=============================== ===== ============= ============
Total equity 1,413.7 1,021.3
=============================== ===== ============= ============
Non-current liabilities
Borrowings 13 495.4 1,216.6
Provisions 12 4,031.4 3,933.7
Deferred tax 7 1,062.2 397.2
Trade and other payables 11.5 18.8
Lease creditor 11 517.5 603.8
Other financial liabilities 14 308.0 1,279.1
=============================== ===== ============= ============
Total non-current liabilities 6,426.0 7,449.2
=============================== ===== ============= ============
Current liabilities
Trade and other payables 871.2 1,251.2
Borrowings 13 19.2 21.5
Lease creditor 11 215.3 220.8
Provisions 12 284.2 231.6
Current tax liabilities 648.7 198.7
Other financial liabilities 14 946.4 2,171.5
=============================== ===== ============= ============
Total current liabilities 2,985.0 4,095.3
=============================== ===== ============= ============
Total liabilities 9,411.0 11,544.5
=============================== ===== ============
Total equity and liabilities 10,824.7 12,565.8
=============================== ===== ============= ============
The notes 1 to 18 form an integral part of these condensed
consolidated half-year financial statements
Condensed consolidated statement of changes in equity
Total
Cash flow Costs
Share Merger Capital hedge of hedging Currency
Share premium reserve redemption reserve reserve translation Retained
capital (1) (1) reserve (2) (2) reserve earnings equity
$ million $ million $ million $ million $ million $ million $ million $ million $ million
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
At 1 January
2022
(Audited) 171.1 1,504.6 677.4 8.1 (2,062.1) 1.5 98.3 74.6 473.5
Profit for the
period - - - - - - - 984.1 984.1
Other
comprehensive
loss - - - - (1,999.0) (13.8) (107.6) - (2,120.4)
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
Total
comprehensive
income - - - - (1,999.0) (13.8) (107.6) 984.1 (1,136.3)
Purchase and
cancellation
of own shares - - - - - - - (53.5) (53.5)
Share-based
payments - - - - - - - 16.7 16.7
Purchase of
ESOP Trust
shares - - - - - - - (8.6) (8.6)
Dividend paid - - - - - (98.3) (98.3)
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
At 30 June
2022
(Unaudited) 171.1 1,504.6 677.4 8.1 (4,061.1) (12.3) (9.3) 915.0 (806.5)
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
At 1 January
2023
(Audited) 171.1 - 271.3 8.1 (776.0) (9.9) (99.7) 1,456.4 1,021.3
(Loss)/profit
for the
period - - - - - - - (8.4) (8.4)
Other
comprehensive
income - - - - 542.4 3.9 91.0 - 637.3
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
Total
comprehensive
income - - - - 542.4 3.9 91.0 (8.4) 628.9
Purchase and
cancellation
of own shares - - - - - - - (150.7) (150.7)
Share-based
payments - - - - - - - 24.4 24.4
Purchase of
ESOP Trust
shares - - - - - - - (11.6) (11.6)
Dividend paid - - - - - - (98.6) (98.6)
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
At 30 June
2023
(Unaudited) 171.1 - 271.3 8.1 (233.6) (6.0) (8.7) 1,211.5 1,413.7
=============== =========== =========== =========== =========== =========== =========== ============ =========== ===========
(1) In H2 2022, share premium and merger reserve balances were
re-categorised to retained earnings following the capital reduction
effective 3 August 2022.
(2) Disclosed net of deferred tax.
Condensed consolidated statement of cash flows
For the six months ended 30 June
2023 2022
Unaudited Unaudited
Note $ million $ million
=============================================== ===== =========== ===========
Net cash flows from operating activities 15 1,486.5 1,861.6
=============================================== ===== =========== ===========
Investing activities
Expenditure on exploration and evaluation
assets (54.7) (69.6)
Expenditure on property, plant and
equipment (276.5) (234.5)
Expenditure on non-oil and gas intangible
assets (5.8) (20.8)
Receipts for sub-lease income 5.2 5.1
Finance income received 59.5 4.0
=============================================== ===== =========== ===========
Net cash flows used in investing activities (272.3) (315.8)
=============================================== ===== =========== ===========
Financing activities
Repurchase of shares (147.7) (41.8)
Proceeds from new borrowings - reserves-based 275.0 -
lending facility
Proceeds from new borrowings - exploration
finance facility - 11.5
Lease liability payments (121.6) (118.2)
Repayment of reserves based lending
facility (1,050.0) (1,037.5)
Repayment of exploration finance facility (10.6) -
Repayment of financing arrangement (13.9) (7.9)
Purchase of ESOP Trust shares (11.6) (8.6)
Interest paid and bank charges (47.2) (75.1)
Dividends paid (98.6) (98.3)
=============================================== ===== =========== ===========
Net cash flows from financing activities (1,226.2) (1,375.9)
=============================================== ===== =========== ===========
Net (decrease)/increase in cash and
cash equivalents (12.0) 169.9
Net foreign exchange difference 5.8 (24.1)
Cash and cash equivalents at 1 January 499.7 698.7
Cash and cash equivalents at 30 June 493.5 844.5
=============================================== ===== =========== ===========
Notes to the half-year condensed consolidated financial
statements
1. General information
Harbour Energy plc is a limited liability company incorporated
in Scotland and listed on the London Stock Exchange. The address of
the registered office is 4th Floor, Saltire Court, 20 Castle
Terrace, Edinburgh, EH1 2EN, United Kingdom.
The condensed consolidated financial statements of Harbour
Energy plc (Harbour) for the six months ended 30 June 2023 comprise
the parent company, Harbour Energy plc (the company) and all its
subsidiaries (the Group), and were approved and authorised for
issuance by the board of directors on 23 August 2023.
The Group's principal activities are the acquisition,
exploration, development and production of oil and gas reserves on
the UK and Norwegian Continental Shelves, Indonesia, Vietnam, and
Mexico.
The condensed consolidated financial information contained in
this report is unaudited. The income statement, statement of
comprehensive income, statement of changes in equity and the cash
flow statement for the six months to 30 June 2023, and the balance
sheet as at 30 June 2023 and related notes, have been reviewed by
the auditors.
2. Basis of preparation and changes to the Group's accounting policies
2.1 Basis of preparation
The half-year condensed consolidated financial statements (the
Financial Statements) for the six months ended 30 June 2023 have
been prepared in accordance with UK-adopted IAS 34 Interim
Financial Reporting and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority. These
half-year condensed consolidated financial statements are to be
read in conjunction with Harbour's Annual Report and Accounts for
the year ended 31 December 2022, which contains additional
accounting policy disclosures and information as required in a set
of annual financial statements.
The Financial Statements do not include all the information
required for a full annual report and do not constitute statutory
financial statements within the meaning of Section 434 of the
Companies Act 2006.
The Financial Statements have been prepared on the
historical-cost basis, except for certain financial assets and
liabilities (including derivative financial instruments), which
have been measured at fair value.
The presentation currency of the Group financial information is
US dollars and all values in the Group financial information are
presented in millions ($ million) and all values are to the nearest
$0.1 million, except where otherwise stated.
2.2 Going concern
The Directors consider the going concern assessment period to be
up to 31 December 2024. The Group monitors and manages its capital
position and its liquidity risk regularly throughout the year to
ensure that it has access to sufficient funds to meet forecast cash
requirements. Cash forecasts are regularly produced and
sensitivities considered based on, but not limited to, the Group's
latest life of field production and expenditure forecasts,
management's best estimate of future commodity prices (based on
recent forward curves, adjusted for the Group's hedging programme)
and the Group's borrowing facilities.
The ongoing capital requirements are financed by the Group's
$3.7 billion reserve-based lending (RBL) facility that has a
current borrowing base of $1.1 billion after the 1 July 2023
redetermination, and $500 million bond. The amount drawn down under
these facilities at 30 June 2023 was $0.5 billion, which together
with cash of $0.5 billion, gave a total available liquidity of $1.6
billion. Further details can be found in note 13. The RBL facility
has a financial covenant relating to the ratio of consolidated
total net debt to consolidated EBITDAX on a historic and
forward-looking basis, which is tested semi-annually. The amount
available under the facility is re-determined annually based on a
valuation of the Group's borrowing base assets when applying
certain forward-looking assumptions, as defined in the borrowing
agreements.
The Group's latest approved business plan underpins the base
case going concern assessment and is based upon management's best
estimate of forward commodity price curves, production in line with
approved asset plans and the ongoing capital requirements of the
Group that will be financed by free cash flow, the existing RBL and
bond financing arrangements. The base case assumes an oil price of
$73/bbl and $80/bbl and average UK natural gas price of 100p/therm
and 140p/therm in H2 2023 and 2024, respectively.
The base case indicates that the Group is able to operate as a
going concern with sufficient headroom and remain covenant
compliant throughout the assessment period.
In line with the principal risks, a sensitivity has been
prepared to reflect the impact of reduction in oil prices of 20 per
cent, a reduction in UK natural gas prices of 30 per cent and a
reduction in the Group's unhedged production of 10 per cent
throughout the assessment period. In these downside scenarios when
applied individually and in aggregate to the base case forecast,
the Group is forecast to have sufficient financial headroom
throughout the assessment period and remain in compliance with its
financial covenants.
Reverse stress tests have been prepared reflecting further
reductions in commodity price and production parameters, prior to
any mitigation strategies, to determine at what levels each would
need to reach such that either the lending covenant is breached, or
financial liquidity headroom runs out. The results of these reverse
stress tests demonstrated that the likelihood of a sustained
significant fall in commodity prices or a significant fall in
production over the assessment period that would cause a risk of
funds shortfall, or a covenant breach is remote and significantly
below the sensitivity test performed.
Taking the above analysis into account, the Board was satisfied
that, for the assessment period, the Group was able to maintain
adequate liquidity and no covenant breaches occurred and therefore
have adopted the going concern basis for preparing the half-year
condensed consolidated financial statements.
2.3 Accounting policies, new standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the
Financial Statements are consistent with those adopted and
disclosed in Harbour's 2022 Annual Report and Accounts, except for
the adoption of new standards effective in the UK as of 1 January
2023. A number of amendments to existing standards and
interpretations were effective from 1 January 2023 but had no
impact on the Financial Statements. The Group has not early adopted
any standard, interpretation or amendment that has been issued but
is not yet effective.
The amendments to existing standards from 1 January 2023 are as
follows, these do not impact the half-year financial statements but
are expected to have an impact on the annual financial
statements.
Definition of Accounting Estimates - Amendments to IAS 8
The amendments to IAS 8 clarify the distinction between changes
in accounting estimates, and changes in accounting policies and the
correction of errors. They also clarify how entities use
measurement techniques and inputs to develop accounting
estimates.
The amendments had no impact on the Group's half-year condensed
consolidated financial statements.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2
The amendments to IAS 1 and IFRS Practice Statement 2 Making
Materiality Judgements provide guidance and examples to help
entities apply materiality judgements to accounting policy
disclosures. The amendments aim to help entities provide accounting
policy disclosures that are more useful by replacing the
requirement for entities to disclose their 'significant' accounting
policies with a requirement to disclose their 'material' accounting
policies and adding guidance on how entities apply the concept of
materiality in making decisions about accounting policy
disclosures.
The amendments had no impact on the Group's half-year condensed
consolidated financial statements.
Deferred Tax related to Assets and Liabilities arising from a
Single Transaction - Amendments to IAS 12
The amendments to IAS 12 Income Tax narrow the scope of the
initial recognition exception, so that it no longer applies to
transactions that give rise to equal taxable and deductible
temporary differences such as leases and decommissioning
liabilities.
The amendments had no impact on the Group's half-year condensed
consolidated financial statements.
2.4 Use of judgements and estimates
In preparing these Financial Statements, management has made
judgements and estimates that affect the application of accounting
policies and the reported amounts of assets and liabilities,
income, and expenses. Actual results may differ from these
estimates.
The significant judgements made by management in applying the
Group's accounting policies, and the key sources of estimation
uncertainty, were the same as those described on page 136 of
Harbour's 2022 Annual Report and Accounts.
3. Segment information
The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the Group's
business segments, has been identified as the Chief Executive
Officer.
The Group's activities consist of one class of business, being
the acquisition, exploration, development and production of oil and
gas reserves and related activities and are split geographically
and managed in two regions: namely North Sea and International. The
North Sea segment includes the UK and Norwegian continental
shelves, and the International segment includes Indonesia, Vietnam
and Mexico.
Income Statement
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
====================================== =========== ==============
Revenue
North Sea 1,893.2 2,481.1
International 98.1 178.3
======================================= =========== ==============
Total Group sales revenue 1,991.3 2,659.4
======================================= =========== ==============
Other income
North Sea 24.5 10.4
International - 0.2
======================================= =========== ==============
Total Group revenue and other income 2,015.8 2,670.0
======================================= =========== ==============
Group operating profit
North Sea 626.6 1,140.9
International 27.1 106.5
======================================= =========== ==============
Group operating profit 653.7 1,247.4
Finance income 33.2 396.9
Finance expenses (257.8) (154.5)
======================================= =========== ==============
Profit before income tax 429.1 1,489.8
Income tax expense (437.5) (505.7)
======================================= =========== ==============
(Loss)/profit for the period (8.4) 984.1
======================================= =========== ==============
Balance Sheet
30 June 2023 31 Dec 2022
Unaudited Audited
$ million $ million
===================== ============= ============
Segment assets
North Sea 9,570.4 11,346.2
International 1,254.3 1,219.6
====================== ============= ============
Total assets 10,824.7 12,565.8
====================== ============= ============
Segment liabilities
North Sea (8,848.9) (10,937.3)
International (562.1) (607.2)
====================== ============= ============
Total liabilities (9,411.0) (11,544.5)
====================== ============= ============
Other information
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
=========================================== =========== ==============
Capital additions
North Sea 269.4 260.9
International 57.1 36.0
============================================ =========== ==============
Total capital additions 326.5 296.9
============================================ =========== ==============
Depreciation, depletion and amortisation
North Sea 691.0 718.8
International 36.9 43.6
============================================ =========== ==============
Total depreciation, depletion and
amortisation 727.9 762.4
============================================ =========== ==============
Exploration and evaluation expenses
and new ventures
North Sea 14.8 19.6
International - 0.8
============================================ =========== ==============
Total exploration and evaluation expenses
and new ventures 14.8 20.4
============================================ =========== ==============
Exploration costs written-off
North Sea 3.8 8.1
International(1) 9.5 (6.4)
============================================ =========== ==============
Total exploration costs written-off 13.3 1.7
============================================ =========== ==============
(1) In the six months to 30 June 2022, International included a
credit to the income statement related to a change to the
decommissioning estimate in the Falkland Islands business unit.
4. Revenue from contracts with customers and other income
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
==================================== =========== ==============
Type of goods
Crude oil sales 1,115.0 1,541.9
Gas sales 759.4 970.2
Condensate sales 99.7 129.0
===================================== =========== ==============
Total revenue from contracts with
customers(1) 1,974.1 2,641.1
Tariff income 14.3 15.6
Other revenue 2.9 2.7
===================================== =========== ==============
Revenue from production activities 1,991.3 2,659.4
Other income(2) 24.5 10.6
===================================== =========== ==============
Total revenue and other income 2,015.8 2,670.0
===================================== =========== ==============
(1) Revenue from contracts with customers of $2,460.2 million
(H1 2022: $4,243.8 million) comprise crude oil sales of $1,146.0
million (H1 2022: $1,975.7 million) and gas sales of $1,214.5
million (H1 2022: $2,139.1 million). This was prior to realised
hedging losses in the period of $31.0 million (H1 2022: $433.7
million) on crude oil and $455.1 million (H1 2022: $1,169.0
million) on gas sales.
(2) Other income mainly represents partner recoveries related to
lease obligations and, in 2023 a receipt related to the Viking CCS
Development Agreement that was signed in March.
5. Operating profit
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
Note $ million $ million
============================================== ======= =========== ==============
Cost of operations
Production, insurance and transportation
costs 575.4 572.7
Gas purchases 6.1 7.8
Royalties 1.6 -
Surrender of GHG voluntary emissions
credits - 7.2
Depreciation of oil and gas assets 10 598.5 658.6
Depreciation of right-of-use oil and
gas assets 11 122.5 100.9
Capitalisation of IFRS 16 lease depreciation
on oil and gas assets 11 (13.1) (17.3)
Amortisation of oil and gas intangible
assets 9 - 0.6
Movement in over/underlift balances and
hydrocarbon inventories (66.7) 34.0
============================================== ======= =========== ==============
Total cost of operations 1,224.3 1,364.5
============================================== ======= =========== ==============
Impairment expense of property, plant
and equipment 10 20.1 -
Impairment (gain)/loss due to increase
in decommissioning provision 10,12 (1.6) 2.6
Exploration costs written-off(1) 9 13.3 1.7
Exploration and evaluation expenditure
and new ventures(2) 14.8 20.4
Gain on disposal(3) - (10.0)
General and administrative expenses
Depreciation of right-of-use non-oil
and gas assets 11 4.6 6.1
Depreciation of non-oil and gas assets 10 3.0 2.6
Amortisation of non-oil and gas intangible
assets 9 12.4 10.9
Other administrative costs(4) 71.2 23.8
============================================== ======= =========== ==============
Total general and administrative expenses(5) 91.2 43.4
============================================== ======= =========== ==============
Operating profit 653.7 1,247.4
============================================== ======= =========== ==============
(1) Exploration costs written-off of $13.3 million includes $9.4
million related to the Ix-1EXP well in Mexico and is net of a $0.4
million credit related to a decrease in decommissioning provisions
in the North Sea (note 12).
(2) Exploration and evaluation expenditure and new ventures of
$14.8 million (H1 2022: $20.4 million) includes $10.5 million (H1
2022: $10.2 million) of early project costs incurred mainly in
respect of the Group's interest in carbon capture and storage (CCS)
and electrification projects in the UK plus $4.3 million of ongoing
pre-licence costs.
(3) The gain on disposal in the six months to 30 June 2022
relates to the release of a provision associated with Premier's
sale of its legacy Pakistan assets in 2019 after the expiry of the
deadline in the period for tax claims to be submitted.
(4) Other administrative costs include a redundancy provision of
$15.6 million and a transfer tax assessment of $3.5 million related
to Indonesia, both of which are non-recurring in nature. Also
included are consultancy costs of $12.8 million.
(5) Expenses related to both short-term and low value leases
arrangements are considered to be immaterial for reporting
purposes.
6. Finance income and finance expenses
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
Note $ million $ million
============================================ ===== =========== ==============
Finance income
Bank interest 10.0 1.8
Other interest and finance gains 7.5 2.5
Lease finance income 0.7 0.8
Realised gains on interest rate swaps 0.2 -
Realised gains on foreign exchange forward
contracts 5.3 0.3
Gains on derivatives(1) 9.5 31.4
Foreign exchange gains(2) - 360.1
============================================ ===== =========== ==============
Total finance income 33.2 396.9
============================================ ===== =========== ==============
Finance expenses
Interest payable on reserves-based lending 11.0 34.6
Interest payable on bond 13.8 13.6
Other interest and finance expenses 3.2 8.6
Lease interest 11 26.1 10.0
Realised losses on interest rate swaps - 0.7
Losses on derivatives(1) - 17.5
Foreign exchange losses 84.5 -
Bank and financing fees(3) 47.8 38.5
Unwinding of discount on decommissioning
and other provisions 12 74.2 32.0
============================================ ===== =========== ==============
260.6 155.5
Finance costs capitalised during the
period(4) (2.8) (1.0)
============================================ ===== =========== ==============
Total finance expense 257.8 154.5
============================================ ===== =========== ==============
(1) Gains on derivatives in H1 2023 relate to changes in the
fair value of an embedded derivative within one of the Group's gas
contracts (H1 2022: loss of $17.5 million). Gains on derivatives in
H1 2022 included mark to market gains on unrealised interest rate
and foreign exchange derivatives.
(2) In the six-month period to 30 June 2022, significant
unrealised foreign exchange gains arose mainly from the revaluation
of open gas hedges denominated in sterling.
(3) Bank and financing fees include $23.0 million (H1 2022:
$21.5 million) relating to the amortisation of arrangement fees and
related costs capitalised against the Group's long-term borrowings
(note 15)
(4) The value of finance costs capitalised was determined by
applying the weighted average rate of finance costs applicable to
the borrowings of the Group of 6.3 per cent to the expenditures on
the qualifying assets (H1 2022: 4.4 per cent).
7. Income tax
The major components of income tax expense for the periods ended
30 June 2023 and 2022 are:
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
=================================================== =========== ==============
Current income tax expense:
UK corporation tax 392.9 316.5
Overseas tax 8.3 35.3
Adjustment in respect of prior years 11.7 (3.8)
=================================================== =========== ==============
Total current income tax expense 412.9 348.0
=================================================== =========== ==============
Deferred tax expense:
Origination and reversal of temporary differences 18.0 172.4
Overseas tax 2.9 (2.3)
Adjustment in respect of prior years 3.7 (12.4)
=================================================== =========== ==============
Total deferred tax expense 24.6 157.7
=================================================== =========== ==============
Total income tax expense reported in the income
statement 437.5 505.7
=================================================== =========== ==============
The tax expense/(credit) in the statement
of comprehensive income is as follows:
=================================================== =========== ==============
Tax expense/(credit) on cash flow hedges 1,638.7 (1,336.1)
=================================================== =========== ==============
The effective tax rate for the six months ended 30 June 2023 was
102 per cent, compared to 34 per cent for the same period in 2022.
The higher effective tax rate for the six months ended 30 June 2023
is primarily caused by the introduction of the Energy Profits Levy
(EPL) at 35 per cent from 1 January 2023 resulting in a headline
tax rate on UK oil and gas profits of 75 per cent (H1 2022: 40 per
cent). There was no charge to EPL in the Group's 2022 half-year
results as the enabling legislation for EPL had not been
substantively enacted by 30 June 2022.
The tax expense has been computed by considering the estimated
annual average expected tax rate for the year, for each
jurisdiction based on enacted or substantively enacted rates at the
end of the half-year period. The rate for the period of 102 per
cent is in excess of the expected estimated annual rate of 79 per
cent as a result of several period specific adjustments including
foreign exchange losses deductible at lower rates (+5 per cent),
changes in deferred tax recognition (+4 per cent), prior period
adjustments (+4 per cent) and non-cash accounting impacts from the
increase in decommissioning provisions booked in the period not
being deductible at 75 per cent (+8 per cent).
Change in tax rates
The main rate of UK corporation tax for non-ring fence profits
increased from 19 per cent to 25 per cent from 1 April 2023. This
change has not had a material impact on the Group as the UK profits
are primarily subject to the UK ring fence tax rate.
The EPL on the profits earned from the production of oil and gas
in the UK was introduced in the previous period. From 1 January
2023, the EPL is charged at the rate of 35 per cent on taxable
profits in addition to ring fence corporation tax of 30 per cent
and the Supplementary Charge of 10 per cent. The EPL is a temporary
measure and will cease to apply on 31 March 2028.
On 9 June 2023, the UK government proposed the introduction of
the Energy Security Investment Mechanism (ESIM) which would end the
imposition of EPL earlier than 31 March 2028 where certain
conditions are met. Under the proposed ESIM, if both average oil
and gas prices fall to, or below, $71.40 per barrel for oil and 54p
per therm for gas, for two consecutive quarters, then the EPL will
be repealed and the headline tax rate on UK oil and gas profits
will return to 40 per cent. The government subsequently confirmed
that the measure would not be legislated for before the triggers
are met and prices are not expected to fall to, or below, the
quoted triggers before the existing EPL end date of 31 March 2028.
The change as currently proposed is therefore not expected to have
a material impact for the Group.
Deferred tax
The principal components of deferred tax are set out in the
following tables:
30 June 2023 31 Dec 2022
Unaudited Audited
$ million $ million
====================================== ============= ============
Deferred tax assets 380.5 1,406.5
Deferred tax liabilities (1,062.2) (397.2)
====================================== ============= ============
Total deferred tax (liability)/asset (681.7) 1,009.3
====================================== ============= ============
The origination of and reversal of temporary differences are, as
shown in the next table, related primarily to movements in the
carrying amount and tax base value of expenditure and the timing of
when these items are changed and are credited against accounting
and taxable profit.
Accelerated
capital Fair Total
deferred
value tax asset/
allowances Decomm-issioning Losses of derivatives Other Overseas (Liability)
$ million $ million $ million $ million $ million $ million $ million
================= ============= ================= =========== ================ =========== =========== =============
As at 1 January
2022 (Audited) (2,820.1) 2,012.9 1,314.5 1,392.1 38.8 (186.9) 1,751.3
Deferred tax
(expense)/
credit (657.7) (361.7) (745.2) 49.0 (39.7) 7.5 (1,747.8)
Comprehensive
income
(expense)/
credit - - - 1,005.6 - - 1,005.6
Foreign exchange 82.2 (85.9) (0.2) 5.0 (1.8) 0.9 0.2
================= ============= ================= =========== ================ =========== =========== =============
As at 1 January
2023 (3,395.6) 1,565.3 569.1 2,451.7 (2.7) (178.5) 1,009.3
(Audited)
Deferred tax
(expense)/
credit 150.9 31.8 (218.9) (11.8) 26.4 (3.0) (24.6)
Comprehensive
income
(expense)/
credit - - - (1,638.7) 1.4 - (1,637.3)
Foreign exchange (53.0) 34.2 0.3 (8.4) 0.3 (2.5) (29.1)
================= ============= ================= =========== ================ =========== =========== =============
As at 30 June
2023
(Unaudited) (3,297.7) 1,631.3 350.5 792.8 25.4 (184.0) (681.7)
================= ============= ================= =========== ================ =========== =========== =============
The Group's deferred tax assets as at 30 June 2023 are
recognised to the extent that taxable profits are expected to arise
against which the tax assets can be utilised. The Group assessed
the recoverability of its UK ring fenced losses and allowances
using corporate assumptions which are consistent with the Group's
impairment assessment. Based on those assumptions, the Group
expects to fully utilise its recognised UK tax losses and
allowances. The recovery of the Group's UK decommissioning deferred
tax asset is additionally supported by the ability to carry back
decommissioning tax losses and set these against ring fence taxable
profits of prior periods.
The Group has unrecognised UK tax losses and allowances as at 30
June 2023 of approximately $219.5 million (Dec 2022: $201.7
million) in respect of ring fence losses, $125.5 million (Dec 2022:
$111.1 million) in respect of ring fence investment allowance and
$751.6 million (Dec 2022: $807.2 million) in respect of non-ring
fence losses.
The Group also has unrecognised gross tax losses of
approximately $142.1 million (Dec 2022: $156.9 million) in respect
of its international operations. These losses include amounts of
$30.3 million which will expire, primarily within 5 years and $14.1
million expiring within 10 years.
The overseas deferred tax relates mainly to temporary
differences associated with fixed asset balances.
No deferred tax liabilities have been provided on unremitted
earnings of overseas subsidiaries, because due to the application
of withholding reliefs under international double taxation treaties
and dividend exemptions under UK and Netherlands legislation no
additional taxation is expected to arise on future
distribution.
Global minimum corporation tax rate - Pillar 2 requirements
The legislation implementing the Organisation for Economic
Co-operation and Development's (OECD) proposals for a global
minimum corporation tax rate (Pillar 2) was substantively enacted
into UK law on 20 June 2023. The rules have effect from 1 January
2024 and therefore the rules do not impact the Group's results to
30 June 2023.
The Group has applied the mandatory exception to recognising and
disclosing information about the deferred tax assets and
liabilities related to Pillar 2 income taxes in accordance with the
amendments to IAS 12 published by the IASB on 23 May 2023. The
Group does not expect the implementation of the Pillar 2 rules to
have a material impact on the Group. However, the Group continues
to assess the detailed impact of the implementation.
Uncertain tax positions
The Group is subject to various uncertainties in respect of
taxes which arise in the ordinary course of business in the
different jurisdictions in which it operates. In assessing whether
these uncertainties should be provided for in the Financial
Statements, management has applied significant judgement of the
likely outcome, based on external advice and prior experience of
such claims.
Where management determines that a tax settlement is considered
probable, it is provided for in our tax charge based on the current
best estimate of the outcome. Where management determines that a
tax settlement is possible but not remote, no provision is made but
a disclosure of the contingent liability is made. Due to the
uncertainty of such tax items, the ultimate outcome of an open tax
matter may significantly differ from management's estimate.
During the period an uncertain tax position has been identified
in certain UK subsidiaries, which could materially impact the
corporate income tax treatment of a portion of our realised hedging
gains and losses across reporting periods ended 31 December 2020 to
30 June 2023. On the strength of independent advice, management
considers that no provision is required however a contingent
liability exists as the UK Tax Authorities could take an
alternative view resulting in a future outflow. At this early
stage, due to the complexities inherent in the underlying data and
related analysis, the potential financial effect, if any, has not
been quantified. Management intends to discuss the position with
the UK Tax Authorities, and for the issue to be either quantified
or resolved by year end.
8. (Loss)/earnings per share
Basic EPS is calculated by dividing the (loss)/profit after tax
attributable to ordinary shareholders of the Group by the weighted
average number of ordinary shares in issue during the year.
Diluted EPS is calculated by dividing the profit after tax
attributable to ordinary shareholders by the weighted average
number of ordinary share in issue during the year plus the weighted
average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares.
The following table reflects the income and share data used in
the basic and diluted EPS calculations:
6 months 6 months
ended 30 ended
June 2023 30 June 2022
Unaudited Unaudited
=================================================== =========== ==============
(Loss)/earnings for the period ($ millions)
(Loss)/earnings for the purpose of basic earnings
per share (8.4) 984.1
Effect of dilutive potential ordinary shares - -
=================================================== =========== ==============
(Loss)/earnings for the purpose of diluted
earnings per share (8.4) 984.1
=================================================== =========== ==============
Number of shares (millions)
Weighted average number of ordinary shares
for the purposes of basic earnings per share(1) 828.7 925.3
Dilutive potential ordinary shares(2) - 6.0
=================================================== =========== ==============
Weighted average number of ordinary shares
for the purposes of diluted earnings per share 828.7 931.3
=================================================== =========== ==============
(Loss)/earnings per share ($ cents)
=================================================== =========== ==============
Basic (1.0) 106.4
Diluted (1.0) 105.7
=================================================== =========== ==============
(1) During the current period 44.9 million ordinary shares were
repurchased and cancelled as part of the share buyback
programme.
(2) Excludes certain share options outstanding at 30 June 2022
as their option price was greater than market price.
9. Other intangible assets
Oil and
gas
Non-oil
and gas Capacity
assets assets(3) rights(4) Total
$ million $ million $ million $ million
================================= =========== =========== =========== ============
Cost
At 1 January 2023 (Audited) 816.7 137.6 8.8 963.1
Additions during the period 56.3 6.6 - 62.9
Reduction in decommissioning
asset(1) (0.4) - - (0.4)
Exploration written-off(2) (13.3) - - (13.3)
Currency translation adjustment 36.2 6.5 - 42.7
================================= =========== =========== =========== ============
At 30 June 2023 (Unaudited) 895.5 150.7 8.8 1,055.0
================================= =========== =========== =========== ============
Amortisation
At 1 January 2023 (Audited) - 74.3 8.8 83.1
Charge for the period - 12.4 - 12.4
Currency translation adjustment - 4.5 - 4.5
================================= =========== =========== =========== ============
At 30 June 2023 (Unaudited) - 91.2 8.8 100.0
================================= =========== =========== =========== ============
Net book value
At 31 December 2022 (Audited) 816.7 63.3 - 880.0
================================= =========== =========== =========== ============
At 30 June 2023 (Unaudited) 895.5 59.5 - 955.0
================================= =========== =========== =========== ============
(1) A reduction in decommissioning intangible assets of $0.4
million was made during the period as a result of an update to
decommissioning estimates (note 12).
(2) The exploration write-off of $13.3 million which relates to
costs associated with licence relinquishments and uncommercial well
evaluations, includes $9.4 million related to the Ix-1EXP well in
Mexico and is net of a $0.4 million credit related to a decrease in
decommissioning provisions in the North Sea (note 12).
(3) Non-oil and gas assets relate primarily to Group IT
software.
(4) The capacity rights represented National Transmission System
(NTS) entry capacity at Bacton and Teesside acquired as part of the
business combination completed in 2017. These rights, which have
been amortised on a contracted volume basis, are now fully
amortised as at 31 December 2022.
10. Property, plant and equipment
Fixtures
and fittings
Oil and gas & office
assets equipment Total
$ million $ million $ million
====================================== ============ ============== ===========
Cost
At 1 January 2023 (Audited) 11,435.6 38.3 11,473.9
Additions 255.9 7.7 263.6
Increase in decommissioning asset(1) 99.2 - 99.2
Currency translation adjustment 162.5 1.7 164.2
====================================== ============ ============== ===========
At 30 June 2023 (Unaudited) 11,953.2 47.7 12,000.9
====================================== ============ ============== ===========
Depreciation
At 1 January 2023 (Audited) 5,759.3 24.4 5,783.7
Charge for the period 598.5 3.0 601.5
Net impairment charge(2) 18.5 - 18.5
Currency translation adjustment 90.1 1.1 91.2
====================================== ============ ============== ===========
At 30 June 2023 (Unaudited) 6,466.4 28.5 6,494.9
====================================== ============ ============== ===========
Net book value
At 31 December 2022 (Audited) 5,676.3 13.9 5,690.2
====================================== ============ ============== ===========
At 30 June 2023 (Unaudited) 5,486.8 19.2 5,506.0
====================================== ============ ============== ===========
(1) An increase to decommissioning assets of $99.2 million (H1
2022: $28.8 million) was made during the period as a result of both
new obligations and an update to the decommissioning estimates
(note 12).
(2) The current period net impairment charge of $18.5 million
includes a pre-tax impairment charge of $20.1 million on two assets
in the UK North Sea, one driven primarily by a significant
reduction in the gas price outlook compared to the 2022 year-end
view, and the other by a revised decommissioning cost profile. In
addition, there is a pre-tax impairment credit of $1.6 million in
respect of revisions to decommissioning estimates on the Group's
non-producing assets with no remaining net book value.
Impairment assessments
Assumptions involved in impairment measurement include estimates
of commercial reserves and production volumes, future oil and gas
prices, discount rates and the level and timing of expenditures,
all of which are inherently uncertain.
For the purpose of its impairment assessments, the Group uses
the fair value less cost of disposal method (FVLCD) to calculate
the recoverable amount of the cash-generating units (CGU)
consistent with a level 3 fair value measurement (see note 14). In
determining the recoverable value, appropriate discounted-cash-flow
valuation models are used, incorporating market-based
assumptions.
Management's commodity price curve assumptions used for the
purposes of management's impairment assessments are benchmarked
against a range of external forward price curves on a regular
basis. Individual field price differentials are then applied. The
first two years reflect the market forward price curves
transitioning to a long-term price from 2025, thereafter inflated
at 2.5 per cent per annum. The long-term commodity prices used were
$65 per barrel for crude and 65p per therm for gas, unchanged from
year-end 2022.
11. Leases
Balance sheet
Land and Drilling Offshore
buildings rigs FPSO facilities Equipment Total
Right-of-use assets $ million $ million $ million $ million $ million $ million
============================== ========== ========== ========== =========== ========== ==========
Cost
At 1 January 2023 (Audited) 87.4 168.9 562.6 334.2 20.0 1,173.1
Cost revisions/remeasurements 1.4 20.2 - (27.7) - (6.1)
Disposals (2.9) - - - - (2.9)
Currency translation
adjustment 4.1 10.4 - 0.2 0.8 15.5
============================== ========== ========== ========== =========== ========== ==========
At 30 June 2023 (Unaudited) 90.0 199.5 562.6 306.7 20.8 1,179.6
============================== ========== ========== ========== =========== ========== ==========
Accumulated depreciation
At 1 January 2023 (Audited) 25.9 128.5 209.5 61.1 13.4 438.4
Charge for the year 4.9 20.0 55.3 44.6 2.3 127.1
Disposals (2.9) - - - - (2.9)
Currency translation
adjustment 1.1 7.8 - 0.2 0.7 9.8
============================== ========== ========== ========== =========== ========== ==========
At 30 June 2023 (Unaudited) 29.0 156.3 264.8 105.9 16.4 572.4
============================== ========== ========== ========== =========== ========== ==========
Net book value
At 31 December 2022
(Audited) 61.5 40.4 353.1 273.1 6.6 734.7
============================== ========== ========== ========== =========== ========== ==========
At 30 June 2023 (Unaudited) 61.0 43.2 297.8 200.8 4.4 607.2
============================== ========== ========== ========== =========== ========== ==========
The significant portion of the Group's lease liabilities
represent lease arrangements for FPSO vessels on the Catcher and
Chim Sáo assets, and offshore facilities on the Tolmount asset.
The lease liabilities and associated right-of-use-assets have
been calculated by reference to in-substance fixed lease payments
in the underlying agreements incurred throughout the
non-cancellable period of the lease along with periods covered by
options to extend the lease where the Group is reasonably certain
that such options will be exercised. When assessing whether
extension options were likely to be exercised, assumptions are
consistent with those applied when testing for impairment.
30 June 2023 31 Dec 2022
Unaudited Audited
Right-of-use liabilities Note $ million $ million
========================================== ==== ============ ===========
At 1 January 824.6 654.3
Additions - 338.0
Re-measurement (6.0) 88.9
Finance costs charged to income statement 6 26.1 25.1
Finance costs charged to decommissioning
provision 12 0.3 0.6
Disposals - (0.4)
Lease payments (127.3) (254.0)
Currency translation adjustment 15.1 (27.9)
========================================== ==== ============ ===========
732.8 824.6
========================================== ==== ============ ===========
Classified as:
Current 215.3 220.8
Non-current 517.5 603.8
========================================== ==== ============ ===========
Total lease liabilities 732.8 824.6
========================================== ==== ============ ===========
Income statement
6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
Depreciation charge of right-of-use assets Note $ million $ million
================================================ ==== ============== ==============
Land and buildings - non-oil and gas
assets 4.6 6.1
Land and buildings - oil and gas assets 0.3 0.6
Drilling rigs 20.0 24.1
FPSO 55.3 58.7
Offshore facilities 44.6 13.5
Equipment 2.3 4.0
127.1 107.0
================================================ ==== ============== ==============
Capitalisation of IFRS 16 lease depreciation(1)
Drilling rigs (12.0) (14.8)
Equipment (1.1) (2.5)
================================================ ==== ============== ==============
Total depreciation charge 114.0 89.7
================================================ ==== ============== ==============
Lease interest 6 26.1 10.0
================================================ ==== ============== ==============
(1) Of the $13.1 million (H1 2022: $17.3 million) capitalised
IFRS 16 lease depreciation, $8.8 million (H1 2022: $13.4 million)
has been capitalised within property, plant and equipment and $4.3
million (H1 2022: $3.9 million) within provisions (note 12).
The total cash outflow for leases in the first six-months of
2023 was $121.6 million (H1 2022: $118.2 million).
12. Provisions
Decommissioning Other
provision(1) provisions(2) Total
$ million $ million $ million
========================================== ================ =============== ============
At 31 December 2022 (Audited) 4,141.3 24.0 4,165.3
Additions 10.2 - 10.2
Changes in estimates - increase
to oil and gas tangible decommissioning
assets 90.6 - 90.6
Changes in estimates - charge/(credit)
to income statement (1.6) - (1.6)
Changes in estimates - decrease
to oil and gas intangible assets (0.4) - (0.4)
Changes in estimates - charge
to income statement - 0.5 0.5
Amounts used (108.3) - (108.3)
Interest on decommissioning lease (0.3) - (0.3)
Depreciation, depletion and amortisation
on decommissioning right-of-use
leased asset (4.3) - (4.3)
Unwinding of discount 74.2 - 74.2
Currency translation adjustment 89.7 - 89.7
========================================== ================ =============== ============
At 30 June 2023 (Unaudited) 4,291.1 24.5 4,315.6
========================================== ================ =============== ============
Classified within:
Current liabilities 284.2
Non-current liabilities 4,031.4
========================================== ================ =============== ============
Total provisions 4,315.6
========================================== ================ =============== ============
(1) The Group provides for the estimated future decommissioning
costs on its oil and gas assets at the balance sheet date. The
payment dates of expected decommissioning costs are uncertain and
are based on economic assumptions of the fields concerned. These
estimated future decommissioning costs are inflated at the Group's
long term view of inflation of 2.5 per cent per annum (H1 2022: 2.0
per cent per annum) and discounted at a risk-free rate of between
3.6 per cent and 4.6 per cent (Dec 2022: 3.5 per cent and 3.7 per
cent) reflecting a 6-month (Dec 2022: 6-month) rolling average of
market rates over the varying lives of the assets to calculate the
present value of the decommissioning liabilities. The unwinding of
the discount is presented within finance costs.
(2) Other provisions relate to a termination benefit provision
in Indonesia, where the Group operates a service, severance and
compensation pay scheme under a collective labour agreement with
the local workforce.
13. Borrowings and facilities
The Group's borrowings are carried at amortised cost:
30 June 2023 31 Dec 2022
Unaudited Audited
$ million $ million
========================================= ============ ===========
Reserves-based lending (RBL) facility(1) - 702.3
Bond 492.4 491.3
Exploration finance facility - 10.5
Other loans 22.2 34.0
========================================= ============ ===========
Total borrowings 514.6 1,238.1
========================================= ============ ===========
Classified within:
Non-current liabilities 495.4 1,216.6
Current liabilities 19.2 21.5
========================================= ============ ===========
Total borrowings 514.6 1,238.1
========================================= ============ ===========
(1) The reserves-based lending (RBL) facility was fully repaid
in the period, leaving $50.8 million of unamortised fees and
related costs to be amortised over the remaining term of the
facility which have been reclassified within current and
non-current assets as appropriate
Bond interest of $5.7 million (Dec 2022: $6.2 million comprising
both bond and RBL interest) had accrued by the balance sheet date
and has been classified within accruals.
The key terms of the RBL facility are:
* Term matures 23 November 2027.
* Facility size of $3.7 billion, with a $1.75 billion
letter of credit sub-limit.
* Debt availability at $1.1 billion effective 1 July
2023.
* Debt availability to be redetermined on an annual
basis.
* Interest at compounded SOFR plus a margin of 3.25 per
cent, rising to a margin of 3.5 per cent from
November 2025.
* A margin adjustment linked to carbon-emission
reductions.
* Utilisation of letter of credit sub-limit after 31
December 2025 requires collateral in the form of cash
cover otherwise the utilisation will reduce the
relevant debt availability.
* Liquidity and leverage covenant tests.
* A syndication group of 19 banks.
* Certain fees are also payable, including fees on
available commitments at 40 per cent of the
applicable margin and commission on letters of credit
issued at 50 per cent of the applicable margin.
In October 2021, the Group issued a $500 million bond under Rule
144A and with a tenor of five years to maturity. The coupon was set
at 5.50 per cent and interest is payable semi-annually.
Since 2019, the Group has been operating within an exploration
finance facility (EFF), of NOK 1 billion, in relation to
part-financing the exploration activities of Harbour Energy Norge
AS. This facility was repaid in full in February 2023.
At 30 June 2023, $58.4 million of arrangement fees and related
costs remain capitalised (Dec 2022: $81.5 million), of which $33.0
million are due to be amortised within the next 12 months (Dec
2022: $20.2 million). $50.8 million of these arrangement fees
relate to the RBL facility, $30.9 million of which have been
reclassified within current assets, and $19.9 million, which are
due to be amortised beyond the next 12 months, have been
reclassified to non-current assets.
At the balance sheet date, the outstanding RBL balance excluding
incremental arrangement fees and related costs was $nil million
(Dec 2022: $775.0 million). As at 1 July 2023, $1,086.0 million
remained available for drawdown under the RBL facility (Dec 2022:
$1,972.0 million).
14. Other financial assets and liabilities
The Group held the following financial instruments at fair value
at 30 June 2023. The fair values of all derivative financial
instruments are based on estimates from observable inputs and are
all level 2 in the IFRS 13 hierarchy, except for the royalty
valuation, which includes estimates based on unobservable inputs
and are level 3 in the IFRS 13 hierarchy.
All financial instruments that are initially recognised and
subsequently remeasured at fair value have been classified in
accordance with the hierarchy described in IFRS 13 Fair Value
Measurement. The hierarchy groups fair-value measurements into the
following levels, based on the degree to which the fair value is
observable.
* Level 1: fair value measurements are derived from
unadjusted quoted prices for identical assets or
liabilities.
* Level 2: fair value measurements include inputs,
other than quoted prices included within level 1,
which are observable directly or indirectly.
* Level 3: fair value measurements are derived from
valuation techniques that include significant inputs
not based on observable data.
30 June 2023 31 Dec 2022
Unaudited Audited
Assets Liabilities Assets Liabilities
Current $ million $ million $ million $ million
=================================== =========== ============ =========== ============
Measured at fair value through
the income statement
Interest rate derivatives - - 24.3 -
Foreign exchange derivatives 5.4 - 6.0 (0.1)
Fair value of embedded derivative
within a gas contract - (50.3) - (57.0)
=================================== =========== ============ =========== ============
5.4 (50.3) 30.3 (57.1)
Measured at fair value through
other comprehensive income
Commodity derivatives 76.0 (896.1) 50.5 (2,114.4)
=================================== =========== ============ =========== ============
Total current 81.4 (946.4) 80.8 (2,171.5)
=================================== =========== ============ =========== ============
Non-current
Measured at fair value through
the income statement
Foreign exchange derivatives 0.4 - - -
Interest rate derivatives - - 18.2 -
=================================== =========== ============ =========== ============
0.4 - 18.2 -
Measured at fair value through
other comprehensive income
Commodity derivatives 100.8 (308.0) 84.5 (1,279.1)
=================================== =========== ============ =========== ============
Total non-current 101.2 (308.0) 102.7 (1,279.1)
=================================== =========== ============ =========== ============
Total current and non-current 182.6 (1,254.4) 183.5 (3,450.6)
=================================== =========== ============ =========== ============
15. Notes to the statement of cash flows
Net cash flows from operating activities consist of:
6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
================================================ ============== ==============
Profit before taxation 429.1 1,489.8
================================================ ============== ==============
Adjustments to reconcile profit before tax
to net cash flows:
Finance cost, excluding foreign exchange 173.3 154.5
Finance income, excluding foreign exchange (33.2) (36.8)
Depreciation, depletion and amortisation 727.9 762.4
Fair value movement in carbon swaps - 1.1
Net impairment of property, plant and equipment 18.5 2.6
Share based payments 11.0 5.9
Decommissioning expenditure (110.7) (91.6)
Exploration costs written-off 13.3 1.7
Onerous contract payments - (2.3)
Gain on disposal - (10.0)
Movement in realised cash-flow hedges not
yet settled (197.5) (140.1)
Unrealised foreign exchange loss/(gain) 61.2 (371.6)
Working capital adjustments:
Increase in inventories (25.6) (22.4)
Decrease in trade and other receivables 567.2 221.9
(Decrease)/increase in trade and other payables (170.7) 59.8
================================================ ============== ==============
Net tax refunds/(payments) 22.7 (163.3)
================================================ ============== ==============
Net cash inflow from operating activities 1,486.5 1,861.6
================================================ ============== ==============
Reconciliation of net cash flow to movement in net
borrowings
6 months ended Year ended
30 June 2023 31 Dec 2022
Unaudited Audited
$ million $ million
=============================================== ============== ============
Proceeds from drawdown of borrowing facilities (275.0) -
Proceeds from EFF loan - (11.5)
Repayment of RBL facility 1,050.0 1,662.5
Repayment of EFF loan 10.6 38.6
Repayment of financing arrangement 13.9 15.4
Financing arrangement interest payable (2.1) (9.5)
Amortisation of arrangement fees and related
costs capitalised (23.0) (54.9)
Currency translation adjustment on EFF loan (0.1) 7.3
=============================================== ============== ============
Movement in total borrowings 774.3 1,647.9
Movement in cash and cash equivalents (6.2) (199.0)
=============================================== ============== ============
Decrease in net borrowings in the period 768.1 1,448.9
Opening net borrowings (738.4) (2,187.3)
Closing net cash/(borrowings) 29.7 (738.4)
=============================================== ============== ============
Analysis of net borrowings
6 months ended Year ended
30 June 2023 31 Dec 2022
Unaudited Audited
$ million $ million
========================================== ============== ============
Cash and cash equivalents 493.5 499.7
RBL facility - (702.3)
Bond (492.4) (491.3)
EFF loan - (10.5)
========================================== ============== ============
Net cash/(debt) 1.1 (704.4)
Financing arrangement (22.2) (34.0)
========================================== ============== ============
Closing net borrowings (21.1) (738.4)
Non-current assets 19.9 -
Current assets 30.9 -
========================================== ============== ============
Closing net cash/(borrowings) after total
unamortised fees(1) 29.7 (738.4)
========================================== ============== ============
(1) $50.8 million of fees associated with the RBL are recognised
in debtors.
The carrying values on the balance sheet are stated net of the
unamortised portion of issue costs and bank fees of $58.4 million
of which $50.8 million relates to the RBL and is recognised in
assets and $7.6 million is netted against the bond (Dec 2022: $81.5
million of which $73 million related to the RBL and $9 million
related to the bond both of which were netted off against the
borrowings).
16. Related Parties
Transactions between the company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed in this note. There have been no new related party
transactions since 31 December 2022, refer to note 28 in the Annual
Report and Accounts for more information.
17. Distributions made and proposed
6 months ended 6 months ended
30 June 2023 30 June 2022
Unaudited Unaudited
$ million $ million
============================================== ============== ==============
Cash dividends on ordinary shares declared
and paid:
Final dividend for 2022: 12 cents per share
(2021: 11 cents per share) 98.6 98.3
Proposed dividends on ordinary shares:
Interim dividend for 2023: 12 cents per share
(2022: 11 cents per share) 100.0 100.0
============================================== ============== ==============
On 9 March 2023, a final dividend of $100 million was declared
in respect of the financial year ended 31 December 2022 and
approved by shareholders on 10 May 2023 at the AGM and paid on 24
May 2023.
An interim dividend of $100 million was declared in respect of
the financial year ending 31 December 2023, to be paid on 18
October 2023. A dividend re-investment plan (DRIP) is available to
shareholders who would prefer to invest their dividend in the
shares of the Company.
18. Post balance sheet events
On 10 August 2023, Harbour entered into Sale and Purchase
Agreements to sell its Vietnam business. This business comprises a
53.125 per cent interest in its operated Chim Sáo and Dua producing
fields within Block 12W which contribute c.4 kboepd net to
Harbour.
The sale is to be effected through a sale of 100 per cent of the
share capital in two wholly owned subsidiaries Premier Oil Vietnam
Offshore BV and Premier Oil (Vietnam) Ltd through which Harbour,
respectively, holds a 28.125 per cent operated interest and 25 per
cent non-operated interest in Block 12W.
The sale is being made to Big Energy Joint Stock Company for a
headline consideration of $84 million based on an effective date of
1 January 2023. This consideration is subject to adjustment for
working capital and cash flows in the interim period. The
transaction, which is subject to government approvals, is targeted
for completion by year end 2023.
On completion we will account for the divestment of the business
within the 'International' segment including removal of non-current
asset values, release of the abandonment liabilities and a reversal
of the deferred tax position associated with both. This will result
in a gain or loss on disposal which cannot be determined at this
stage due to the consideration being subject to adjustment up to
completion.
Glossary
2C Best estimate of contingent resources
======= =========================================================
2P Proven and probable reserves
======= =========================================================
ABP Associated British Ports
======= =========================================================
AGM Annual general meeting
======= =========================================================
Bbl Barrel
======= =========================================================
Boe Barrel of oil equivalent
======= =========================================================
CCS Carbon capture and storage
======= =========================================================
CGU Cash generating unit
======= =========================================================
DD&A Depreciation, depletion and amortisation
======= =========================================================
DRIP Dividend re-investment plan
======= =========================================================
EBITDAX Earnings before interest, tax, depreciation, amortisation
and exploration
======= =========================================================
EFF Exploration financing facility
======= =========================================================
EPL Energy Profits Levy (UK)
======= =========================================================
EPS Earnings per share
======= =========================================================
ESIM Energy Security Investment Mechanism
======= =========================================================
ESOP Employee stock ownership plan
======= =========================================================
EUA European Union Allowance
======= =========================================================
FEED Front End Engineering & Design
======= =========================================================
FPSO Floating production storage offtake vessel
======= =========================================================
FVLCD Fair value less cost of disposal
======= =========================================================
GAAP Generally accepted accounting principles
======= =========================================================
GHG Greenhouse gas emissions
======= =========================================================
IAS International Accounting Standards
======= =========================================================
IFRSs International Financial Reporting Standards
======= =========================================================
Kboepd Thousand of barrels of oil equivalent per day
======= =========================================================
Mmbbl Million barrels of oil
======= =========================================================
Mmboe Million barrels of oil equivalent
======= =========================================================
Mscf Thousand standard cubic feet
======= =========================================================
Mtpa Million tonnes per annum
======= =========================================================
NBP Natural gas prices
======= =========================================================
NOK Norwegian krone
======= =========================================================
NTS National Transmission System
======= =========================================================
PP&E Property, plant and equipment
======= =========================================================
RBL Reserves-based lending
======= =========================================================
SOFR Secured Overnight Financing Rate
======= =========================================================
Tcf Trillion cubic feet
======= =========================================================
Therm Unit of UK natural gas
======= =========================================================
TRIR Total Recordable Injury Rate
======= =========================================================
UDP Unit development plan
======= =========================================================
Non-IFRS measures
Harbour uses certain measures of performance that are not
specifically defined under IFRS or other generally accepted
accounting principles (GAAP). These non-IFRS measures, which are
presented within the Financial Review, are defined below:
* Capital investment: Depicts how much the Group has
spent on purchasing fixed assets in order to further
its business goals and objectives. It is a useful
indicator of the Group's organic expenditure on oil
and gas assets, and exploration and appraisal assets,
incurred during a period.
* DD&A per barrel: Depreciation and amortisation of oil
and gas properties for the period divided by working
interest production. This is a useful indicator of
ongoing rates of depreciation and amortisation of the
Group's producing assets.
* EBITDAX: Earnings before interest, tax, depreciation
and amortisation, impairments, remeasurements,
onerous contracts and exploration expenditure. This
is a useful indicator of underlying business
performance.
* Free cash flow: Operating cash flow less cash flow
from investing activities less interest and lease
payments and is before shareholder distributions.
* Leverage ratio: Net debt/ last twelve months EBITDAX.
* Liquidity: The sum of cash and cash equivalents on
the balance sheet and the undrawn amounts available
to the Group on our principal facilities. This is a
key measure of the Group's financial flexibility and
ability to fund day-to-day operations.
* Net cash/debt: Total reserves-based lending facility,
bond, and exploration financing facility (net of the
carrying value of unamortised fees recognised in
borrowings) less cash and cash equivalents recognised
on the consolidated balance sheet. This is an
indicator of the Group's indebtedness and
contribution to capital structure.
* Operating cost per barrel: Direct operating costs
(excluding over/underlift) for the period, including
tariff expense, insurance costs and mark to market
movements on emissions hedges, less tariff income,
divided by working interest production. This is a
useful indicator of ongoing operating costs from the
Group's producing assets.
* Shareholder returns paid: Dividends plus share
buybacks completed in the period are included in this
metric which shows the overall value returned to
stakeholders in the period.
* Total capital expenditure: Capital investment
'additions' per notes 9 and 10 plus decommissioning
expenditure 'amounts used' per note 12.
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END
IR BZLBLXVLFBBL
(END) Dow Jones Newswires
August 24, 2023 02:00 ET (06:00 GMT)
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