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Harbour Energy (LSE:HBR) has announced a return to profitability for the six months ending June 30, reversing the loss experienced during the same period last year. The company reported a profit after tax of £44.9 million, compared to a loss of £8 million in the first half of 2023. This improvement has led to earnings per share rising to seven cents, a significant recovery from the one-cent loss reported previously.
Revenue and Cash Flow Decline
Despite the return to profitability, Harbour Energy faced challenges in revenue and cash flow. Revenue declined by four percent, dropping from $2 billion (£1.6 billion) to $1.9 billion (£1.5 billion). Profit before tax also fell from $429 million (£338 million) to $392 million (£309 million). Operating cash flow decreased to $953 million, while free cash flow saw a substantial decline from $1 billion (£789 million) to $383 million (£302 million). The company has projected that free cash flow will be significantly higher in 2025.
Production Guidance Update
Harbour Energy has revised its full-year production guidance upward. The company now expects production to reach between 155,000 and 165,000 barrels of oil equivalent per day (kboepd), with the midpoint exceeding the previous guidance of 150,000 to 165,000 kboepd.
Share Price Movement
Following the financial update, Harbour Energy's shares increased by 1.7 percent during morning trading, reflecting a positive market response to the profitability announcement.
Acquisition of Wintershall Dea Assets
In addition to the financial results, Harbour Energy recently disclosed an $11.2 billion (£8.8 billion) acquisition of assets from Wintershall Dea. These assets are located in Norway, Denmark, Mexico, and Algeria. This acquisition followed Wintershall’s loss of control over its Russian assets, which had been co-owned with Gazprom and were seized by the Kremlin.
Strategic Focus and Future Outlook
Linda Cook, Chief Executive of Harbour Energy, highlighted the company’s strategic focus on safe operations, optimizing the value of its existing portfolio, and advancing organic growth projects. Cook also noted the significant progress made towards finalizing the Wintershall Dea acquisition, which is expected to be completed in early Q4 2024. The acquisition is anticipated to enhance the scale, geographical diversity, and longevity of Harbour’s portfolio, while also strengthening its capital structure. This move is expected to contribute to improved shareholder returns in the long term and position the company for further opportunities.
