Harbour Energy Presents Trading Update

Harbour Energy plc provides the following unaudited Trading and Operations update for the year ended 31 December 2022, ahead of announcing its Full Year Results on 9 March 2023.

2022 Operational Highlights

• Increased production of 208 kboepd (2021: 175 kboepd), towards the top end of 200-210 kboepd guidance and split 50 per cent liquids / 50 per cent gas. The 19 per cent increase versus 2021 was driven by new wells online including at Tolmount, improved operating efficiency and a full year’s contribution from the Premier assets.
• Lower estimated operating costs of $13.7/boe (2021: $15.2/boe), reflecting higher volumes, a weaker UK sterling to US dollar exchange rate and continued progress with our integration efforts.
• Improved safety performance with total recordable injury rate¹ materially reduced to 0.8 per million hours worked (2021: 1.3).
• Organic growth opportunities progressed
  • UK: Investment decisions taken on Talbot development and Leverett appraisal
  • Indonesia: Significant gas discovery at the Timpan prospect (Andaman II licence) with further drilling planned for 2023 and 2024; plan of development for the Tuna field approved by the Indonesian Government
  • Mexico: Zama development plan being finalised ahead of submission to the Mexican Government
• Lower GHG intensity¹ of c.21 kgCO₂e (2021: 23 kgCO₂e), reflecting improved operational efficiency and the implementation of emission-reduction projects.
• Significant momentum on our two UK CCS projects, including the Harbour-led Viking project which has the potential to meet one third of the UK government’s target to capture and store 30 mtpa of CO₂ by 2030. Milestones included completion of pre-FEED work, new partnerships formed with major customers and CO₂ storage capacity independently verified.

2022 Financial Highlights

• Estimated revenue of $5.4 billion with realised post-hedging oil and UK gas prices of $78/bbl and 86 pence/therm versus an average Brent price of $101/bbl and UK NBP gas price of 198 pence/therm.
• Estimated EBITDAX of $4.1 billion (2021: $2.4 billion). Post tax earnings impacted by a significant one-off non-cash deferred tax charge associated with the Energy Profits Levy (EPL) in the UK. As a result of the increase in and extension of the EPL, the revaluation deferred tax charge² will be materially higher than the previously estimated $0.6 billion charge disclosed in our 2022 Half Year Results.
• 2022 total capital expenditure of $1.0 billion, in line with latest guidance and materially lower than the $1.3 billion forecast at the outset of the year. This was due to the decisions not to proceed with several North Sea exploration and appraisal wells as well as the delayed arrival of rigs at some locations. The weaker UK sterling to US dollar exchange rate was also a factor.
• Total cash tax payments of c.$600 million, more than double that made in 2021, in part driven by the introduction of the EPL.  Estimated 2022 EPL liability of over $350 million of which c.$200 million was paid in 2022 with the balance to be paid in 2023.
• Estimated 2022 free cash flow (post tax, pre-shareholder distributions) of $2.1 billion (2021: $0.7 billion). The increase was driven by higher production levels and the improved commodity price environment offset by hedging losses and increased cash tax payments.
• Total shareholder distributions of $600 million announced comprising c.$200 million annual dividend and $400 million of share buybacks. The buybacks comprised a $300 million programme which completed in September and a $100 million programme which was 57 per cent complete at year-end. As a result, over the course of 2022 we repurchased 8.5 per cent of our issued share capital.
• Net debt reduced from $2.3 billion to $0.8 billion and leverage reduced from 0.9x to 0.2x. Significant liquidity with cash and undrawn facilities of $2.5 billion.