Harbour Energy PLC (LSE:HBR) launched a US$200mln share buyback programme, marking a fresh milestone in the rehabilitation of what’s now the North Sea’s largest independent oil and gas producer.
The company (formed last year with the merger of Premier Oil and Chrysaor) told investors it has entered into irrevocable, non-discretionary agreements with its corporate brokers to execute the share buy-back programme on its behalf. It is scheduled to be completed before the end of 2022.
In the brief statement, Harbour said it “continues to employ a disciplined and prudent approach to capital allocation, balancing its three priorities of safeguarding the balance sheet, ensuring a robust and diverse portfolio and shareholder returns.”
In May, Harbour confirmed it is rapidly repaying debt thanks to the recent surge in oil prices with some US$600mln repaid over the first three months of 2022.
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).
It will be impacted by the UK government’s windfall tax (the ‘Energy Profits Levy) though as a company with scope for new UK investments could also benefit from the introduction of new and improved tax reliefs, representing some 91p in every £1 invested.