Harbour Energy plc
(“Harbour” or the “Group” or the “Company”)
Full Year Results
9 March 2023

Harbour Energy today announces its audited full year results for the year ended 31 December 2022.

Linda Z Cook, Chief Executive Officer, commented:

“In our first full year as a publicly listed company, Harbour delivered materially higher production which – together with improved margins – enabled us to continue to deleverage and make material shareholder distributions. We further developed our Net Zero strategy, setting ourselves an interim target, and built significant momentum in our flagship Viking CCS project.  Most importantly we achieved all of this while improving our safety record.

However, the UK Energy Profits Levy, which applies irrespective of actual or realised commodity prices, has disproportionately impacted the UK-focused independent oil and gas companies that are critical for domestic energy security. For Harbour, the UK’s largest oil and gas producer, it has all but wiped out our profit for the year. This has driven us to reduce our UK investment and staffing levels.  Given the fiscal instability and outlook for investment in the country, it has also reinforced our strategic goal to grow and diversify internationally.

Thanks to our robust balance sheet, we enter 2023 well-placed to deliver on our strategy of building a global diverse oil and gas company.  We will continue to return any excess capital to shareholders while investing in our existing portfolio and maintaining capacity for meaningful but disciplined M&A.”

2022 Operational highlights

  • Production of 208 kboepd (2021: 175 kboepd), a 19 per cent increase on 2021
  • Improved unit operating costs of $13.9/boe (2021: $15.2/boe)
  • Total recordable injury rate reduced to 0.8 per million hours worked (2021: 1.3)
  • Investment decisions taken on Talbot development and Leverett appraisal in the UK
  • Material discovery at Timpan-1 (Indonesia), de-risking a multi-TCF gas play
  • Zama (Mexico) development plan substantially agreed ahead of submission to the regulator
  • 2P reserves and 2C resources of 865 mmboe (2021: 948 mmboe), reflecting Indonesia exploration success offset by production and UK licence relinquishments
  • Net Zero by 2035: Board-approved interim target to halve our emissions by 2030
  • Viking CCS CO2 storage resources of 300 mt independently verified; customer base expanded

2022 Financial highlights

  • Realised, post hedging, oil and UK gas prices of $78/bbl and 86p/therm (2021: $59/bbl, 54p/therm)
  • Increased EBITDAX of $4.0 billion (2021: $2.4 billion) and profit before tax of $2.5 billion (2021: $0.3 billion)
  • Profit after tax of $8 million (2021: $101 million) impacted by a $1.5 billion one off non-cash deferred tax charge associated with the EPL
  • Free cash flow of $2.1 billion (2021: $0.7 billion) after total capital expenditure of $0.9 billion (2021: $0.9 billion) and $551 million of tax payments (2021: $280 million)
  • Approved $600 million of shareholder distributions: $553 million made in 2022; $41 million in 2023
  • Net debt (excluding unamortised fees) and leverage reduced to $0.8 billion (2021: $2.3 billion) and 0.2x (2021: 0.9x), respectively
  • Proposed final dividend of $100 million (12 cents per share) for 2022, in line with $200 million annual dividend policy; given our buybacks, this represents dividend per share growth of nine per cent

Outlook for 2023

  • Production guidance of 185-200 kboepd reiterated; production to end February of 202 kboepd
  • Opex guidance unchanged at c.$16/boe
  • Total capex guidance reiterated at c.$1.1 billion, including c.$0.2 billion decommissioning, split 85 per cent UK / 15 per cent international
    • UK capex targeting high return, near field and/or infrastructure-led opportunities
    • International capex focused on growth opportunities with potential for material reserves replacement, including Zama (Mexico) and Andaman (Indonesia)
  • Review of UK organisation to align with lower activity levels to complete in second half of 2023
  • Continued efforts to reduce emissions and progress UK CCS projects to a final investment decision
  • At $85/bbl, 150 pence/therm, forecast 2023 free cash flow (post-tax, pre-distributions) of c.$1.0 billion1 with the potential to be net debt free in 2024
  • New $200 million share buyback announced today which, together with the $200 million annual dividend policy, brings total announced shareholder returns to $1 billion since December 2021

Enquiries

Harbour Energy plc                                                                                Tel: 020 3833 2421

Elizabeth Brooks, Head of Investor Relations

Brunswick                                                                                                Tel: 020 7404 5959

Patrick Handley, Will Medvei

1 The $1 billion of free cash flow is after tax payments and reflects that the majority of our 2023 EPL liability is expected to be paid in 2024 due to one of the Harbour entities not currently falling within the UK tax instalment payment regime.

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