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Harbour Energy plc (LSE:HBR) has released its unaudited results for the first half of 2024, showcasing steady operational performance and financial stability despite a slight dip in production volumes. For the six months ended 30 June 2024, the company reported production of 159 thousand barrels of oil equivalent per day (kboepd), a decrease from 196 kboepd in the same period last year. The production mix remains balanced between liquids and gas, reflecting Harbour's diverse asset base.
The company has maintained its strong safety record, with a total recordable incident rate (TRIR) of 0.7 per million hours worked, an improvement from 0.8 in the first half of 2023. Harbour’s capital projects in the UK, notably the Talbot project, are on schedule to boost production significantly in the fourth quarter. Additionally, Harbour has achieved exploration success with the Tangkulo discovery in Indonesia, and appraisal drilling at the Layaran site is currently underway. The Group is also making progress on strategic investments, including the Zama project in Mexico and Viking CCS in the UK, which are advancing through the front-end engineering design (FEED) phase.
Financial Performance
Harbour’s financial performance for the period aligns with expectations. Revenue totaled $1.9 billion, a decrease from $2.0 billion in the first half of 2023. EBITDAX, a key measure of operational performance, also declined to $1.2 billion from $1.4 billion year-over-year. Despite these decreases, the company reported a profit before tax of $0.4 billion, consistent with the prior year, and a profit after tax of $0.1 billion, a turnaround from the $8 million loss reported in the first half of 2023. The effective tax rate stands at approximately 85%, reflecting Harbour's current UK concentration.
Free cash flow for the period was $0.4 billion, down from $1.0 billion in the previous year, impacted by $0.1 billion in acquisition-related fees. The company ended the period with a small net cash position. Harbour has declared an interim dividend of $100 million (13 cents per share), which aligns with its annual dividend policy of $200 million and represents an 8% increase in the dividend per share compared to the previous year.
Future Outlook
Looking ahead, Harbour has narrowed its production guidance for 2024 to a range of 155-165 kboepd, up from the previous range of 150-165 kboepd. This revision reflects progress on capital projects and planned maintenance shutdowns. The company has reiterated its guidance for unit operating costs at approximately $18 per barrel of oil equivalent (boe) and total capital expenditure at around $1.2 billion.
At current commodity prices, Harbour expects to be marginally free cash flow positive for the full year, with estimates ranging from $100 million to $200 million. The company also projects a significant increase in free cash flow for 2025, driven by stable production levels and lower capital expenditures.
Wintershall Dea Acquisition
Harbour Energy is targeting early Q4 2024 for the completion of its acquisition of the Wintershall Dea portfolio. The company has substantially completed its financing workstreams, including bondholder consent processes and the syndication of its revolving credit facility (RCF) and bridge facility. Harbour has published its prospectus and shareholder circular, with shareholder approval received overwhelmingly in favor of the acquisition. Regulatory and foreign direct investment approvals are progressing as planned, including the recent receipt of UK FDI approval and consent from the NSTA.
