Harbour Energy reports profit after tax of $101mn in 2021

UK north sea oil and gas producer Harbour Energy prospers from high oil prices to report operating cash flow of $1.6bn in 2021

Harbour Energy has rebounded strongly by reporting profit after tax of $101mn and an operating cash flow of $1.6bn in 2021 - compared with a $778mn loss in 2020.

The UK north sea oil and gas producer saw production increase marginally to 175 kboepd, compared with 173 kboepd in 2020.

Opex and total capex were lower than forecast at $15.2/boe (2020: $11.2/boe) and $935mn (2020: $698mn) respectively. Opex and total capex guidance are unchanged at $15-16/boe and $1.3bn respectively for 2022.

CEO Linda Z Cook said 2021 was a transformational year with completion of Premier's merger with Harbour UK operating company Chrysaor, through a reverse takeover, and it became a public company with a global footprint and 'the largest London-listed independent oil and gas company'.

"With our scale, our commitment to producing safely and responsibly, our robust balance sheet and track record of successful M&A, I believe we are well placed to deliver value creation, growth and shareholder returns," she said.

This year it is targeting production of 195-210 kboepd, an approximate 15% increase versus 2021, and production of 219 kboepd to end February

Tolmount (UK) platform commissioning is largely complete and start-up underway, and drilling at Catcher, J-Area, Beryl (UK); Natuna and Andaman II (Indonesia) and Chim Sao (Vietnam) are scheduled.

Harbour Energy said it is making "continued progress" to Net Zero by 2035, including activity on its UK CCS projects. At $100 /bbl, 200 p/therm, it is forecasting free cash flow (after tax and $200mn dividend) of $1.5-1.7bn with potential to be net debt free in 2023.

Harbour Energy 2021 operational oil and gas highlights

  • Completed merger with Premier (the Merger); realisation of synergies progressing as planned
  • Successful drilling at J-Area, Elgin Franklin, AELE, Beryl (UK) and Natuna and Tuna (Indonesia)
  • 2P reserves increased to 488 mmboe, representing 157 per cent 2P reserves replacement
  • Working practices adapted to protect our employees and contractors from COVID-19; Total Recordable Injury Rate of 1.27 per million hours worked
  • Net Zero 2035 progress includes emissions reduction actions, continued involvement in two UK CCS projects and offsetting more than 25 per cent of our emissions
  • Alignment of portfolio with Harbour’s strategy, including exits from Sea Lion (Falkland Islands) and Brazil exploration licences

Harbour Energy 2021 financial highlights

  • Operating cash flow of $1.6bn (2020: $1.4bn). Free cash flow of $678mn (2020: $562mn)
  • Profit after tax of $101mn (2020: Loss after tax of $778mn)
  • EBITDAX increased to $2.4bn, up 36 per cent (2020: $1.8bn)
  • Opex and total capex lower than forecast at $15.2/boe (2020: $11.2/boe) and $935 million (2020: $698mn) respectively
  • Completed $500mn debut bond issuance with a coupon of 5.5 per cent
  • Year-end net debt of $2.3bn (2020: $1.5bn) before unamortised fees and 0.9x leverage (2020: 0.8x), in line with target of less than 1.5x through the commodity price cycle
  • Introduction of an initial $200mn annual dividend; proposed final dividend of $100mn (11 cents per share) for full year 2021 to be paid in May 2022 following shareholder approval
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