Harbour Energy PLC Trading and Operations Update (8593Y)
May 10 2023 - 1:00AM
UK Regulatory
TIDMHBR
RNS Number : 8593Y
Harbour Energy PLC
10 May 2023
Harbour Energy plc
("Harbour" or the "Company")
Trading and Operations Update
10 May 2023
Harbour Energy plc today provides the following unaudited
Trading and Operations Update for the first quarter of 2023. This
is issued ahead of the Company's Annual General Meeting (AGM) which
is being held today at 10.00 BST.
Operational highlights
* Production averaged 202 kboepd (Q1 2022: 215 kboepd),
split broadly 50 per cent liquids, 50 per cent gas.
This reflects new wells on-stream, including at
Tolmount, J-Area and Clair, partially offsetting
natural decline. On track to meet full year guidance
of 185-200 kboepd.
* Estimated operating costs of c.$15/boe (Q1 2022:
$14/boe). Full year forecast is unchanged at
c.$16/boe [1] .
* Strong safety record with total recordable injury
rate of 0.82 per million hours worked.
* High return, infrastructure-led UK development
opportunities progressed, including start of drilling
at Talbot.
* Growing portfolio of international development
opportunities with the potential for material reserve
replacement and diversification:
* Mexico: Submission of Zama Unit Development Plan for
approval to the regulator; oil discovery at Kan-1.
* Indonesia: Following the 2022 Timpan gas discovery,
high impact three well Andaman exploration drilling
campaign to start in the second half of the year;
partner and government discussions underway at Tuna
to enable the project to progress.
* Significant progress on our UK CCS projects with the
Harbour-operated Viking and non-operated Acorn
projects recognised as best placed to meet the UK
Government's objectives for the Track 2 regulatory
approval process. Confirmation of Track 2 status
would allow negotiation with the Government over the
terms of the economic licences to commence and the
projects to move to FEED ahead of a potential final
investment decision.
Financial highlights
* Estimated revenue of $1.1 billion with realised,
post-hedging, oil and UK gas prices of $76/bbl and 71
pence/therm. This compares to average Brent and NBP
prices of $81/bbl and 133 pence/therm for the period.
* Total capital expenditure (including decommissioning
spend) of c.$0.2 billion. Full year guidance of
c.$1.1 billion(1) reiterated, reflecting:
* Increased activity post first quarter including
drilling in the UK, and exploration campaigns in
Indonesia and Norway.
* Reduced UK activity in certain areas due to the EPL,
including partner cancelled programmes at Elgin
Franklin and Beryl and rephasing of certain
decommissioning activities.
* Review of UK organisation on track to complete in the
second half of 2023 and expected to result in a
reduction of c.350 onshore positions. This is
forecast to deliver annual savings of c.$50 million
from 2024, following an estimated c.$15 million one
off charge to be taken in Harbour's 2023 interim
financial statements.
* Free cash flow for the period was $0.7 billion.
Forecast full year free cash flow (after c.$450
million of tax payments and pre-distributions) is
unchanged at c.$1.0 billion [2] and is first quarter
weighted due to summer maintenance campaigns and
phasing of capital expenditure and tax payments.
* Net debt reduced from $0.8 billion at year end to
c.$0.2 billion at the end of March. The potential to
be net debt free in 2024(2) is unchanged.
* Significant liquidity of $3.1 billion, as at quarter
end, although our debt capacity is expected to be
impacted by the EPL at the upcoming annual
re-determination of our borrowing base.
Capital allocation
* Proposed final dividend of $100 million (12 cents per
share) for 2022 to be paid on 24 May, subject to
shareholder approval and in line with $200 million
annual dividend policy. This represents dividend per
share growth of nine per cent, driven by the
significant share repurchases made over the last 12
months.
* New $200 million buyback programme initiated in March
2023. As at 9 May 2023, c.$50 million of the
programme had been completed with over 10 per cent of
our issued share capital repurchased since Harbour's
2022 AGM.
* Ongoing evaluation of M&A opportunities to grow and
diversify internationally, in line with Harbour's
stated strategy.
Linda Z Cook, Chief Executive Officer, commented:
"We delivered a strong first quarter. Continuing to invest in
our portfolio while actively managing our cost base has enabled us
to further deleverage our balance sheet and return additional
capital to shareholders. At the same time, we've built good
momentum in our international development opportunities in Mexico
and Indonesia which have the potential to add materially to our
reserves and future production, and in our CCS projects, all of
which will lead to future diversification of our business."
Enquiries
Harbour Energy plc
Elizabeth Brooks, Head of Investor Relations
020 3833 2421
Brunswick
Patrick Handley, Will Medvei
020 7404 5959
Appendix 1: Group production
Q1 2023 Q1 2022
(net, kboepd) (net, kboepd)
Greater Britannia
Area 28 34
--------------- ----------------
J-Area 36 34
--------------- ----------------
AELE hub 26 27
--------------- ----------------
Catcher 20 22
--------------- ----------------
Tolmount 16 -
--------------- ----------------
Elgin Franklin 21 26
--------------- ----------------
Buzzard 12 16
--------------- ----------------
Beryl 11 13
--------------- ----------------
West of Shetlands(3) 15 15
--------------- ----------------
Other North Sea 7 12
--------------- ----------------
North Sea 192 199
--------------- ----------------
International 10 16
--------------- ----------------
Total Group 202 215
--------------- ----------------
(3) West of Shetlands includes Clair, Schiehallion and Solan
Appendix 2: Hedging schedule as per 30 April 2023
During the first quarter, Harbour incrementally added to its UK
gas hedging position for summer and winter 2024 and summer 2025,
securing zero cost collars at attractive pricing.
2023 2024 2025
Volume Price Volume Price Volume Price
(p/th (p/th,
(mmboe) $/bbl) (mmboe) $/bbl) (mmboe) (p/th $/bbl)
UK
gas
Swaps 21.5 40 9.9 52 1.6 45
Collars 1.6 55 - 69 2.4 119 - 269 1.1 108 - 270
Options 0.0 - 0.0 - 0.0 -
========= ======== ======== ======== ========== ======== =============
Oil
Swaps 11.0 74 7.3 84 2.4 81
========= ======== ======== ======== ========== ======== =============
[1] Assumes a US dollar to GBP sterling exchange rate of
$1.2/GBP
[2] Assumes for 2023 that Brent and NBP averages $85/bbl and 150
pence/therm respectively and a US dollar to GBP sterling exchange
rate of $1.2/GBP. For 2024, the 9(th) May 2023 forward curve for
Brent and NBP is assumed and a $1.25/GBP US dollar to GBP sterling
exchange rate.
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