After UK-based oil and gas company Ithaca Energy yesterday announced that production output and capex would be lower in the coming year, today's half-year results from sector peer Harbour Energy have outlined a similar outlook for the rest of its fiscal year.
Both companies have blamed the UK government’s energy profits levy, or windfall tax, with Harbour Energy today lowering the top end of their production guidance to 195kboepd, while also saying that total capex for the year would be reduced to $1bn. The share prices of both businesses have continued to struggle, both down sharply year to date.
Harbour Energy's H1 revenue came in at just over $2bn, down from $2.67bn a year ago, as oil and gas prices fell. Profit before tax decreased to $429m, down from $1.49bn in the year-ago period. After tax of $437m, the company incurred a H1 net loss of $8m, compared to a profit of $984m last year. The news sent the company's shares lower in early trade.
Of total revenue, $1.11bn came from crude oil, while gas contributed $759m, with the bulk of sales coming from its North Sea operations. International revenue accounted for a mere $98.1m in sales.
The company announced an interim dividend of $100m or 12c a share, while saying that they expected to reach zero net debt by the middle of next fiscal year.
This is a significant achievement given that at the time of the Premier Oil and Chrysaor merger the company was carrying net debt of $2.9bn.
Due to the windfall tax CEO Linda Cook said that the review of their UK operations had delivered annual savings of $50m from 2024, with Harbour growing its share of UK domestic oil and gas to 15%.
The company says it continues to develop Tolmount East where first gas is expected to flow at the end of this year, while Talbot production is expected to begin around the end of 2024.
The company also said its generating decent momentum in its two CCS projects which are expected to deliver a steady income stream.
Harbour Energy says it expects to complete the $84m sale of its Vietnam business by the end of the current tax year.
There was no mention in today’s statement about the reports in June that the company was reported to be in talks with US based Talos Energy, which it has a partnership with in the Gulf of Mexico.
Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
