Harbour Energy Plc · LSE:HBR
Harbour Energy — Investor Day (December 2021)
70 slides from Harbour Energy's investor day presentation, December 2021
Slide 1: Capital Markets Day Presentation
Capital Markets Day Presentation Harbour Energy plc December 2021
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements, including in relation to the financial condition of the Harbour group (the "Group") and the results of operations and businesses of the Group. Forward-looking statements are sometimes, but not always, identified by their use of a date
Slide 3: Introduction and Strategy
Introduction and Strategy Linda Z Cook
Slide 4: Agenda
Agenda Est. GMT timings Topic Presenter 12.00 Introduction and Strategy Linda Z Cook, CEO 12.20 Operations and Portfolio Overview Phil Kirk, President & CEO Europe 12.40 Guidance and Capital Allocation Alexander Krane, CFO 13.05 Wrap up of First Session Linda Z Cook, CEO 13.05 Q&A Linda Z Cook, Phil
Slide 5: Evolution of Harbour
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Evolution of Harbour c.200 kboepd 175 kboepd1 137 kboepd 17 kboepd ConocoPhillips Largest UK listed Harbour founded by Shell transaction Premier merger transaction complete
Slide 6: A global independent O&G company
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Harbour at a glance A global independent O&G company Norway UK c.200 kboepd (2022-2024) Mexico Vietnam $15-16/boe c.950 mmboe Operating cost1 2P reserves + 2C resources3 Br
Slide 7: Our leadership
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Our leadership Majority independent board Senior management Phil Kirk Linda Cook Alexander Krane Executive Director Executive Director Executive Director President & CEO Eu
Slide 8: A unique investment opportunity
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Our investment proposition Exposure to pure-play Diverse, cash Positioning for the upstream, global O&G generative producing energy transition company portfolio of scale A
Slide 9: The macro environment: oil has a continuing role in the global energy system
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions The macro environment: oil has a continuing role in the global energy system Continued investment required to offset natural decline Global oil demand and supply1 mbopd 120
Slide 10: The macro environment: outlook for European gas market remains strong
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions The macro environment: outlook for European gas market remains strong Reduced supply and strong demand has driven prices higher, underlining the importance of domestic prod
Slide 11: Strategy: create value by continuing to build a global, diversified O&G company
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Strategy: create value by continuing to build a global, diversified O&G company Focused on Value creation Cash flow Distributions Safe, reliable and Realise value from our
Slide 12: Harbour's strategic scope
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Harbour’s strategic scope Harbour will… Harbour will not… Focus on upstream oil and gas production Invest in non-strategic midstream, power, renewables Grow to at least two
Slide 13: Potential path to Net Zero 2035
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Potential path to Net Zero 2035 Our Net Zero commitment includes our share of Scope 1 and Scope 2 CO2e emissions from operated and non-operated assets Existing portfolio, S
Slide 14: Path to Net Zero: a look at 2021
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Path to Net Zero: a look at 2021 Net GHG emissions mtCO2e, Scope 1 and Scope 2 emissions 2021 achievements 2 Standardised baseline emissions Include carbon cost in all
Slide 15: The current environment is favourable for M&A led growth
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions The current environment is favourable for M&A led growth Even though commodity prices are high, multiple opportunities exist for well-capitalized buyers Major oil and gas
Slide 16: A track record of value creation via M&A and integration
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions A track record of value creation via M&A and integration Harbour transactions Improving production performance Reinvestment to add reserves Diversifying the portfolio Manag
Slide 17: Track record of delivery and value creation
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Track record of delivery and value creation Material growth 1.7x Targeted capex at attractive IRR Robust free cash flow Production Total capex (ex decom.) Cumulative FCF2 k
Slide 18: Operations and Portfolio Overview
Operations and Portfolio Overview Phil Kirk
Slide 19: Strong cash generation through the cycle
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Strong cash generation through the cycle A reliable and safe operator c.200 kboepd High operating efficiency A strong focus on managing costs Opex/boe within target r
Slide 20: A strong Health, Safety, Environmental and Security (HSES) culture
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions A strong Health, Safety, Environmental and Security (HSES) culture Harbour is committed to operating responsibly and securely, never compromising our HSES standards Focus
Slide 21: Production returned to >200 kboepd, with improved uptime and addition of Premier assets
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Production returned to >200 kboepd, with improved uptime and addition of Premier assets 2021F of 175 kboepd, consistent with guidance of 170-180 kboepd 2021 reported produc
Slide 22: Tolmount gas project, UK Southern North Sea
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Tolmount gas project, UK Southern North Sea (Harbour 50%, operator) Tolmount production expected to start up in Q1 2022 with initial rates of c.20 kboepd Inspect and repair
Slide 23: Adding new production in 2022 to offset decline – predominantly natural gas
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Adding new production in 2022 to offset decline – predominantly natural gas Harbour operated Non-operated Tolmount +15-20 kboepd First gas expected Q1 2022 J-Area +8 kboepd
Slide 24: Good project visibility to sustain production around current levels in near term
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Good project visibility to sustain production around current levels in near term Higher production in 2022 due to full year from Premier’s portfolio, less downtime and new
Slide 25: Operating costs broadly flat on an absolute basis
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Operating costs broadly flat on an absolute basis Harbour’s operating costs remain below that of the UKCS average Unit operating cost1 Historical Forecast $/boe HBR UKCS me
Slide 26: High value, infrastructure-led investment programmes
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions High value, infrastructure-led investment programmes Adding reserves and extending field life via targeted reinvestment programmes Plant mods / Infill targets / Near field
Slide 27: Significant competence in decommissioning
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Significant competence in decommissioning >$500m of savings and cost reductions since 2017 Track record of extending field life and deferring decommissioning1 Strong oper
Slide 28: Our emissions reduction activities
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Our emissions reduction activities >1 million tonnes CO2e reductions forecast through sanctioned or planned projects (2021-2035) c.$150m forecast spend on emission reductio
Slide 29: CCS projects: V Net Zero & Acorn
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions CCS projects: V Net Zero & Acorn Exploring the potential for CCS projects to support a lower carbon economy in the UK and generate revenue from importation V Net Zero – Low
Slide 30: Significant near term value creation
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Significant near term value creation Track record of reserves replacement 2P reserves1 Production mmboe 2P reserves Production kboepd Reserves replacement supported by re
Slide 31: Successful history of delivering value-accretive M&A and post transaction integration
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Successful history of delivering value-accretive M&A and post transaction integration Key Highlights CPR1 2P Reserves (mmboe) CPR1 2P Reserves (mmboe) c.75% reserve repla
Slide 32: Significant operational synergies being realised from the Premier merger
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Significant operational synergies being realised from the Premier merger Right sizing the organisation Rationalising our offices Headcount Number of offices # FTE 10 2,000
Slide 33: Guidance and capital allocation
Guidance and capital allocation Alexander Krane
Slide 34: Strong cash generation through the cycle
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Strong cash generation through the cycle… ...underpinned by prudent capital allocation and a robust financial framework A reliable and safe operator A strong focus on manag
Slide 35: A balanced and diversified portfolio underpinning resilient revenue
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions A balanced and diversified portfolio underpinning resilient revenue UK gas an increasing part of Harbour’s production mix Production Crude marketing % Diverse portfolio i
Slide 36: Hedging programme
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Hedging programme Increasing exposure to commodity prices as leverage reduces and integration of Premier concludes Hedged volumes Hedged oil production Hedged oil price ($/
Slide 37: Operating costs broadly stable
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Operating costs broadly stable Total opex $m Underlying base operating costs broadly 1,500 flat, yet to see inflation Operating costs expected to stay broadly stable at
Slide 38: Infrastructure led capex portfolio with short cycle payback
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Infrastructure led capex portfolio with short cycle payback P&D Capex 2022 P&D project break-evens Other $/boe $m corporate GBA 40 Zama Projects with breakeven SE Asia J-Ar
Slide 39: Managing our decommissioning programme
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Managing our decommissioning programme Strong operational control over portfolio provides opportunity Harbour decommissioning liability $m to extend field life and drive
Slide 40: A tax efficient asset base
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions A tax efficient asset base Harbour is corporate tax paying in all Group cash tax paid2 jurisdictions in which it has production $m operations 300 Harbour has c.$4 bn of
Slide 41: Financing and capital structure
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Financing and capital structure A diversified capital structure and low financing cost Available debt commitments1 $m $4.5bn Reserve Based Lending Facility, including $1.
Slide 42: A robust financial framework
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions A robust financial framework Long term value creation at Harbour Energy Capital allocation priorities Operational inputs Responsible and safe 1 2 3 operator Safeguard Ensur
Slide 43: Safeguard balance sheet
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions 1 Safeguard balance sheet Protecting the business from volatility Significant liquidity, no material near term debt maturities $m Balance sheet tested under a range of pr
Slide 44: Ensuring a robust and diverse portfolio
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions 2 Ensuring a robust and diverse portfolio Reinvestment in the portfolio and M&A competes for capital with shareholder returns and strengthening of the balance sheet Capital
Slide 45: Shareholder returns
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions 3 Shareholder returns An annual sustainable dividend of $200m, equating to 16p/share1 today Prudent capital allocation Proposed dividend timetable Balance sheet strength
Slide 46: Three year (2022-2024) capital allocation outlook
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Three year (2022-2024) capital allocation outlook Balancing investment in attractive projects with a sustainable dividend policy and debt repayments Illustrative three year
Slide 47: Guidance
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Guidance FY 20211 20211 FY 2022 Guidance Forecast Guidance Production 170-180 175 195-210 kboepd kboepd kboepd Operating cost 15-16 c.16 15-16 $/boe $/boe $/boe Capital exp
Slide 48: Wrap up of first session
Wrap up of first session Linda Z Cook
Slide 49: Well positioned for value creation
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Well positioned for value creation Exposure to pure-play Diverse, cash Positioning for the upstream, global O&G generative producing energy transition company portfolio of
Slide 50: Q&A
Q&A
Slide 51: Agenda
Agenda Est. GMT timings Topic Presenter 12.00 Introduction and Strategy Linda Z Cook, CEO 12.20 Operations and Portfolio Overview Phil Kirk, President & CEO Europe 12.40 Guidance and Capital Allocation Alexander Krane, CFO 13.05 Wrap up of First Session Linda Z Cook, CEO 13.05 Q&A Linda Z Cook, Phil
Slide 52: Asset deep dive - Europe
Asset deep dive - Europe Bob Fennell
Slide 53: Europe Assets
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Europe Assets West of Shetlands Beryl Area Priorities Operated Non-operated Safe and reliable operations Cost management Reduction of emissions Clair - multi-decade o
Slide 54: Greater Britannia Area – our largest producer
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Greater Britannia Area – our largest producer Harbour operated, 26%-87.5% interest Production, P&D capex Production outlook 2021F: c.32 kboepd (44% liquids, 56% gas) kb
Slide 55: J-Area – significant inventory of high value, short cycle opportunities
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions J-Area – significant inventory of high value, short cycle opportunities Harbour operated, 67%-67.5% interest Production, P&D capex Production outlook: a material growth h
Slide 56: Catcher Area – continued outperformance, further reserves upgrades anticipated
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Catcher Area – continued outperformance, further reserves upgrades anticipated Harbour operated, 50% interest Production, P&D capex Production outlook Upside (inc. Infill
Slide 57: AELE – late life field optimisation
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions AELE – late life field optimisation Harbour operated, 100% interest1 Production, P&D capex Production outlook kboepd, $m (net) kboepd (net) 2021F: 24 kboepd (c. 70% gas
Slide 58: West of Shetlands – Clair multi-decade oil field with material upside potential
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions West of Shetlands – Clair multi-decade oil field with material upside potential BP operator of Clair, Schiehallion; Harbour operator Production, P&D capex Production outl
Slide 59: Elgin Franklin – one of the world's largest HPHT developments
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Elgin Franklin – one of the world’s largest HPHT developments TotalEnergies operator Production, P&D capex Production outlook kboepd, $m (net) kboepd (net) 2021F: 18 kb
Slide 60: Buzzard – flagship UK oil production
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Buzzard – flagship UK oil production CNOOC operator Production, P&D capex Production outlook kboepd, $m (net) kboepd (net) 2021F: 13 kboepd (99% liquids, 1% gas) c.90
Slide 61: Beryl – cash generative production with material upside
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Beryl – cash generative production with material upside Apache operator Production, P&D capex Production outlook kboepd, $m (net) kboepd (net) Actual / Forecast 2021F:
Slide 62: Asset deep dive - International
Asset deep dive - International Stuart Wheaton
Slide 63: South East Asia – an operated, full cycle business
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions South East Asia – an operated, full cycle business Harbour operator of Natuna Sea Block A and Chim Production, P&D capex Production outlook kboepd, $m (net) Tuna Actual /
Slide 64: Tuna, Indonesia – appraisal campaign completed
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Tuna, Indonesia – appraisal campaign completed Harbour 50% operated interest, carried through appraisal drilling Potential initial net rates Positive appraisal results, all
Slide 65: Andaman II, Indonesia – multi TCF gas play
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Andaman II, Indonesia – multi TCF gas play High impact, low risk targeted exploration 40% operated interest 6-12 TCF of amplitude supported gas Strong, supportive partn
Slide 66: Mexico, Sureste Basin – a prolific hydrocarbon province
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Mexico, Sureste Basin – a prolific hydrocarbon province Zama oil field, Block 7, Sureste Basin Production, P&D capex Zama illustrative production profile kboepd, $m (net) k
Slide 67: Concluding remarks
Concluding remarks Linda Z Cook
Slide 68: Well positioned for value creation
Introduction Strategy Operations Guidance and Capital Allocation Asset Review – Europe Asset Review – International Conclusions Well positioned for value creation Exposure to pure-play Diverse, cash Positioning for the upstream, global O&G generative producing energy transition company portfolio of
Slide 69: Q&A
Q&A
Slide 70: investor.relations@harbourenergy.com www.harbourenergy.com
+44 (0)20 773 0111 investor.relations@harbourenergy.com www.harbourenergy.com