Harbour Energy (LSE:HBR) Plc is rapidly repaying debt thanks to the recent surge in oil prices with some US$600mln repaid over the first three months of 2022.
The largest London-listed independent oil and gas company, formed just over a year ago through the merger of cash-strapped Premier Oil and private-equity owned Chrysaor, today told investors it generated more than US$1.5bn of revenue in its first quarter.
Net debt reduced to US$1.7bn from US$2.3bn at the end of December and Harbour said it expects to be debt free in 2023.
The oil company expects to generate US$1.5bn to US$1.7bn of free cash, after taxes and dividends, this year. It added that it will therefore have “significant optionality” over future capital allocation, including possible transactions and extra returns to shareholders.
In the three months ended 31 March 2022, the company produced 215,000 barrels of oil equivalent per day, at an operating cost of US$14.10 per barrel, and achieved an average oil sales price of US$103 per barrel (US$84 post hedging), whilst gas was sold at the equivalent of US$160 per barrel (US$66 post hedging).
There have been political calls for a windfall tax on oil and gas companies, amidst soaring fuel costs. Harbour today said it paid US$140mln of tax in the quarter, most of which was in the UK, and pointed to its US$1.3bn capital spending budget, the majority of which is earmarked for investments into operations in the UK. The capex outlay would represent a 40% increase on last year.
The investment will include the development and expansion of existing fields – more than 20 development and infill wells are due to be completed before the end of 2022.
"We have had a strong start to the year. Our increased production reflects the addition of the Premier portfolio, improved operating reliability and increased UK drilling activity,” said chief executive Linda Cook.
“The Tolmount field in the UK began production in April and, once plateau levels are reached, the project is expected to increase UK domestic gas production by more than 5%.”
Cook added: “We continue to invest in high return, infrastructure-led opportunities within our asset base to sustain production while at the same time generating material free cash flow.”
Harbour noted its efforts in the area of energy transition, with UK-based carbon capture projects among the growth initiatives currently on the company’s slate.