Harbor Energy has slipped into the red, posting an after-tax loss of $8 million for the first half of 2023.
The decline, the company said, was driven by a higher UK tax rate and one-off tax charges. Harbor Energy’s profit after tax for the first half of 2022 was $1 billion.
Production averaged 196 kbopd, down from the 211 kbopd average for the first half of 2022, but still in line with guidance and split equally between liquids and gas. This reflects contributions from new wells in Harbour-operated Tolmount and J-Area cores in the UK offset by natural decline, the company noted.
The company further said in its press release that the 2023 production guidance is reduced to 185-195 kboepd, reflecting the delays and deferrals of drilling at centers operated by partners, mainly Beryl.
Total capital expenditure for the period was $0.4 million. Total capital spending forecast for the full year is down from $1.1 billion to $1 billion. This reduction is driven by some capex now falling in 2024 due to the delayed arrival of rigs, mainly in the Andaman and Great Britain area, as well as the postponement of subsea and platform drilling campaigns in Beryl, said Harbor Energy.
In response to the Energy Profits Levy (EPL) in the UK, Harbor Energy said it has reduced its activities in certain areas and acted decisively to manage its cost structure.
“This included a review of our UK organisation, which is expected to deliver annual savings of around $50m from 2024, after a one-off charge of $16m in our states semiannual financials,” Harbor noted.
“We remain focused on maximizing the value of our oil and gas portfolio in the UK, progressing our organic development projects and disciplined capital allocation,” commented Linda Z Cook, chief executive.
“This has allowed us to continue to generate significant free cash flow that supports material shareholder distributions while maintaining the capacity for meaningful but disciplined M&A. We have also advanced our strategic investment opportunities outside of oil and gas from the UK – in Indonesia, in Mexico and in CCS. These have the potential to materially increase our reserve life, support shareholder returns and diversify our business over time,” Cook added.
Free cash flow (after taxes, pre-distributions) was $1 billion, compared to $1.4 billion in 2022.
Looking ahead, Harbor Energy expects full-year free cash flow of $1 billion at $80/bbl and average prices of 100p/term to 2023, and close 2023 with a small position of net debt
This reflects more than $400 million in tax payments and increased capital expenditures in the second half of the year, the company said.
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