Harbour Energy reported a strong operational and financial performance for 2025, marked by significant production growth and increased free cash flow, despite lower commodity prices.

Operational and Financial Performance

Production averaged 474,000 barrels of oil equivalent per day (boepd), an 84% increase from 2024, driven by new wells in the UK, Norway, Argentina, and Egypt. This scale, achieved through acquisitions, contributed to a 22% reduction in operating costs to $12.8 per boe. Total revenue rose to $10.3 billion from $6.2 billion, and adjusted EBITDAX increased to $7.2 billion from $4.1 billion. Free cash flow surged to $1.1 billion from $100 million the prior year, even with lower post-hedge prices of $69 per barrel for oil and $13 per thousand cubic feet for European gas.

Strategic Developments and Portfolio Management

Key operational milestones included assuming operatorship of the Zama field in Mexico, launching construction at the Southern Energy LNG project in Argentina, and divesting assets in Vietnam and Indonesia. Major acquisitions included LLOG, marking entry into the US Gulf, and Waldorf in the UK, which offers potential tax synergies of $900 million. However, proven-plus-probable reserves and contingent resources decreased to 3 billion boe from 3.2 billion boe.

Financial Results and Tax Impacts

Despite the strong operational performance, Harbour posted a $200 million net loss for 2025. This was driven by a 106% effective tax rate, a $300 million deferred tax charge linked to UK fiscal changes, and $700 million in impairments and exploration write-offs in North Africa, Mexico, and carbon capture and storage.

Shareholder Returns and Outlook

A new shareholder distributions policy was announced, targeting distributions of 45% to 75% of free cash flow. Total 2025 distributions were $478 million, approximately 45% of free cash flow. For the current year, production is forecast between 475,000 and 500,000 boepd, with average lifting costs of $14.5 per boe. Capital expenditure is expected to be $2.2 billion to $2.4 billion, reflecting costs from the recent acquisitions. Free cash flow is estimated at $600 million, based on assumed prices of $65 per barrel for Brent crude and $11 per thousand cubic feet for European gas.