TIDMHBR
RNS Number : 0783A
Harbour Energy PLC
18 January 2024
Harbour Energy plc
("Harbour" or the "Company")
Trading and Operations Update
18 January 2024
Harbour Energy plc provides the following unaudited Trading and
Operations Update for the year ending 31 December 2023, ahead of
announcing its Full Year Results on 7 March 2024.
2023 Business Highlights
* Production averaged 186 kboepd (2022: 208 kboepd),
split approximately 50% liquids / 50% gas, and within
guidance
* Operating costs averaged c.$16/boe (2022: $14/boe),
in line with guidance
* Improved safety performance with total recordable
injury rate of 0.7 per million hours worked (2022:
0.8)
* Successful start-up of Tolmount East in Q4; other
material UK investments included the Talbot
development and the successful appraisal of the
Leverett discovery, supporting production from late
2024
* Significant gas discovery at Layaran-1 (Harbour 20%),
the first well drilled in the 2023-2024 multi-well
exploration campaign targeting a major gas play
across the Andaman Sea licences in Indonesia. This
follows the drilling of the Timpan gas discovery in
2022
* In Mexico, approval by the regulator in July of the
Zama Field Development Plan, and the Kan oil
discovery on Block 30 in April
* Significant momentum on Harbour's two UK CCS projects
which were awarded Track 2 status by the UK
government. For Harbour's operated Viking project,
FEED has been awarded and the project secured its
first potential CO(2) shipping customer
* Announced transformational acquisition of the
Wintershall Dea asset portfolio in December with
completion expected in Q4 2024
2023 Financial Highlights
* Revenue of c.$ 3.9 billion (2022: $5.4 billion) with
realised post-hedging oil and UK gas prices of $ 78
/bbl and 54 pence/therm (2022: $78/bbl, 86
pence/therm)
* Estimated total capex of c.$ 1.0 billion (2022: $0.9
billion), including c.$0.3 billion of decommissioning,
in line with guidance
* Estimated free cash flow of c.$1.0 billion (2022:
$2.1 billion), after total cash tax payments of
c.$0.4 billion and before shareholder distributions,
in line with expectations
* Shareholder distributions of $441 million (2022: $551
million), comprising c.$200 million of dividend
payments and $241 million of share buybacks
* Net debt reduced to $ 0.2 billion at year end 2023
(2022: $0.8 billion)
2024 Guidance and 2025 Outlook [1]
The 2024 guidance and 2025 outlook relates to Harbour's current
portfolio and excludes any effects or contribution from the
proposed acquisition of the Wintershall Dea asset portfolio.
* 2024 production of 150-165 kboepd, with an unusually
high level of planned shutdowns at our operated hubs
and the Beryl area, coinciding with planned pipeline
outages. Guidance also reflects the impact of
deferred partner-operated wells at Beryl and Elgin
Franklin in the UK and the anticipated sale of the
Vietnam business
* 2024 unit operating cost of c.$18/boe[2], higher than
2023 due to lower volumes with absolute operating
costs broadly flat year-on-year
* Increased total capital expenditure of c.$1.2 billion
(including lower decommissioning spend of $0.2
billion), driven by higher investment in the UK and
internationally:
* Increased UK drilling activity targeting high return,
quick payback opportunities in our operated J-Area,
Greater Britannia and AELE hubs, in addition to the
Talbot development, all of which will add to
production and support cash flow starting in late
2024
* Advancement of our UK CCS projects including FEED at
Viking
* Increased investment in our international growth
projects which have the potential to materially
increase our reserve life. This includes the
exploration campaign in Indonesia, where d rilling of
the Halwa and Gayo wells on the Andaman II license
(Harbour 40%, operator) is underway; and, in Mexico,
FEED for the Zama development and the drilling of the
Kan appraisal well
* At $85/bbl and 100p/therm, 2024 free cash flow of
$0.2 billion. This is after estimated tax of c.$1.2
billion, reflecting the expected full utilisation of
our UK corporation tax losses in H1 2024, and phasing
of UK EPL payments
* In line with our annual dividend policy, Harbour
expects to pay $200 million in dividends, comprising
a $100 million final dividend for 2023 and a $100
million 2024 interim dividend
* Harbour expects to be net debt free during H1 2024
but to close the year in a small net debt position,
reflecting the second half weighting of UK tax
payments. Harbour continues to expect to remain
undrawn on its RBL facility.
* Looking ahead to 2025, Harbour expects:
* Production to be similar to 2024, with less
maintenance downtime and volumes from new wells and
projects substantially offsetting natural decline
* Unit operating costs to be broadly flat with 2024
while capital expenditure is anticipated to be
materially lower
* Significantly higher free cash flow compared to 2024,
resulting in a sizeable net cash position by year end
Acquisition of Wintershall Dea Asset Portfolio
* On 21 December 2023, Harbour announced the
acquisition of substantially all of Wintershall Dea's
upstream assets for $11.2 billion. The acquisition is
subject to shareholder and regulatory approvals and
is anticipated to complete in Q4 2024
* In Q2 2024, Harbour plans to publish a prospectus and
shareholder circular which will include historical
financial information and an independent valuation of
2P reserves for the Wintershall Dea assets. They will
also set out the details of the shareholder meeting
to approve the Acquisition
* As at 17 January 2024, Harbour had received
irrevocable undertakings from shareholders currently
representing more than 25% of its issued share
capital to vote in favour of the acquisition
Linda Z Cook, Chief Executive Officer, commented:
"We made significant progress against our strategic goals in
2023. Our safety performance improved. We continued to maximise the
value of our UK production base while ensuring disciplined capital
allocation, resulting in significant free cash flow and shareholder
returns over and above our base dividend. We also advanced our UK
CCS projects and our international growth opportunities in
Indonesia and Mexico, delivering against key milestones. And, at
year end, we announced the transformational acquisition of the
Wintershall Dea portfolio.
"Looking ahead to 2024, our priorities are for the continued
safe and responsible operations of our existing portfolio and the
successful completion of the Wintershall Dea acquisition. We are
proud of our achievements over the past year and excited about the
future of the company."
Enquiries
Harbour Energy plc
Elizabeth Brooks, Head of Investor Relations
Tel: +44 203 833 2421
Brunswick
Patrick Handley, Will Medvei
Tel: +44 207 404 5959
Appendix 1: Group production
2023 2022
(net, kboepd) (net, kboepd)
Greater Britannia
Area 27 31
--------------- ---------------
J-Area 34 30
--------------- ---------------
AELE hub 22 27
--------------- ---------------
Catcher 16 19
--------------- ---------------
Tolmount 13 14
--------------- ---------------
East Irish Sea 4 8
--------------- ---------------
Elgin Franklin 19 24
--------------- ---------------
Buzzard 11 15
--------------- ---------------
Beryl 14 11
--------------- ---------------
West of Shetlands(1) 14 14
--------------- ---------------
Other North Sea(2) 1 2
--------------- ---------------
North Sea 175 195
--------------- ---------------
International 11 13
--------------- ---------------
Total Group 186 208
--------------- ---------------
(1) West of Shetlands comprises Clair, Schiehallion and Solan.
(2) Other North Sea includes Galleon, Ravenspurn North and
Johnston.
2023 2023
(net liquids, kboepd) (net gas, kboepd)
Greater Britannia
Area 9 18
----------------------- -------------------
J-Area 16 18
----------------------- -------------------
AELE hub 5 17
----------------------- -------------------
Catcher 15 1
----------------------- -------------------
Tolmount 1 12
----------------------- -------------------
East Irish Sea - 4
----------------------- -------------------
Elgin Franklin 7 12
----------------------- -------------------
Buzzard 11 -
----------------------- -------------------
Beryl 9 5
----------------------- -------------------
West of Shetlands(1) 13 1
----------------------- -------------------
Other North Sea(2) 1 1
----------------------- -------------------
North Sea 86 89
----------------------- -------------------
International 4 7
----------------------- -------------------
Total Group 90 96
----------------------- -------------------
(1) West of Shetlands comprises Clair, Schiehallion and Solan.
(2) Other North Sea includes Galleon, Ravenspurn North, and
Johnston.
Appendix 2: Hedging schedule(1)
2023 2024 2025 2026
Volume
(mmboe)
Volume Av. price Volume Av. price Av. price Volume Av. price
(mmboe) (p/th, $/bbl) (mmboe) (p/th, $/bbl) (p/th, $/bbl) (mmboe) (p/th, $/bbl)
UK
gas
Swaps 21.5 40 10.1 54 5.7 87 1.2 106
Collars 1.6 55-69 3.0 112-263 1.7 98-233 0.4 80-150
Oil
Swaps 11 74 7.3 84 4.4 77 0 0
--------- -------------- --------- -------------- ---------- -------------- --------- --------------
(1) As at 31 December 2023
Appendix 3: 2023 actual and 2023 and 2024 guidance
2023 Guidance 2023 Actual 2024 Guidance
(as at Nov (as at Jan 2024)
2023)
Production (kboepd) 185-195 186 150-165
------------- ----------- -----------------
Operating costs ($/boe) c.16 c.16 c.18
------------- ----------- -----------------
Total capex ($ billion) c.1.0 c.1.0 c.1.2
------------- ----------- -----------------
[1] 2024 guidance and 2025 outlook assumes that the sale of
Harbour's Vietnam business completes on 30 June 2024
[2] Assumes a US dollar to GBP sterling exchange rate of
$1.25/GBP
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