Harbour Energy Plc · LSE:HBR
Harbour Energy — FY2022 Earnings Presentation
27 slides from Harbour Energy's earnings presentation, Mar 9, 2023
Slide 1: 2022 Full Year Results
2022 Full Year Results Harbour Energy plc March 2023
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: Agenda
Agenda 1. 2022 Highlights 2. Operational review 3. Financial review and 2023 guidance 4. Concluding remarks Harbour Energy | 2022 Full Year Results 2
Slide 4: Strategy recap
Strategy recap Continue building a global diversified independent oil and gas company ▪ Ensure safe, reliable and environmentally responsible operations ▪ Maintain a high quality portfolio of reserves and resources ▪ Leverage our full cycle capability to diversify and grow further ▪ Ensure financial
Slide 5: 2022 Highlights
2022 Highlights Delivering safe and responsible operations and disciplined capital allocation amidst extreme market volatility Injury rate (TRIR) improved Higher realised pricing Strong operational Robust financial performance 0.8 results $78/bbl, 86p/therm 2021: 1.3 below market prices due to hedgi
Slide 6: A focus on safe and responsible operations
A focus on safe and responsible operations Safety is our top priority Improved occupational safety record TRIR (per million hours worked)1 2022 0.8 2021 1.3 Improved process safety performance Events (Tier 1 and Tier 2)1 Tier 1 Tier 2 1 ▪ No significant injuries or process safety events 2022 0 ▪ Con
Slide 7: Strong 2022 operational performance
Strong 2022 operational performance… …underpinned by a diverse, cash generative production base with a good balance of oil and gas Production ▪ Significant asset diversification kboepd 208 kboepd ▪ Robust margins 200 19% Other UK ▪ Material interests in major UK hubs with upside increase Beryl 175 k
Slide 8: Higher production underpinned by new wells (primarily natural gas)
Higher production underpinned by new wells (primarily natural gas) Completed c.50 well intervention programmes and brought online 15 new wells during 2022 Production kboepd J-Area (Harbour 66-67%) Active rig campaign at J-Area, including Int’l gas 200 UK gas first gas from Jade South which added c.1
Slide 9: An efficient operator with robust margins
An efficient operator with robust margins… …with opportunities to remain competitive amidst inflationary environment Increased efficiency driven by less Reduced unit cost driven by increased maintenance shut downs and improved volumes, weaker sterling and consolidation reliability of supplier contra
Slide 10: 2022 Year-end reserves and resources
2022 Year-end reserves and resources Reflects Indonesia exploration success offset by production and UK Growing international portfolio 2P reserves, 2C resources, net, mmboe licence relinquishments 2C contingent resources, net, mmboe3 Int’l2 2C resources UK 2C resources 948 1000 mmboe 865 YE 2022 20
Slide 11: 2023 production is forecast at 185-200 kboepd
2023 production is forecast at 185-200 kboepd … … with new wells coming onstream partially offsetting natural decline Production kboepd 2023 Guidance 225 208 kboepd 185-200 kboepd 175 kboepd Tolmount 150 75 202 kboepd Year to end February 0 2021 Full year PMO Natural Production New 2022 Natural Prod
Slide 12: Maximising value of our UK portfolio through targeted investment
Maximising value of our UK portfolio through targeted investment… …and realising the upside of our existing assets Improving recovery factor Converting 2C resource into 2P reserves ▪ Infill drilling and well interventions ▪ Near-field satellite tie-backs ▪ Application of production technology ▪ Prio
Slide 13: Growing portfolio of international development opportunities
Growing portfolio of international development opportunities… …provide potential for material reserves replacement Norway Mexico: Zama c.100 mmboe 2C ▪ 3,160 km2 of exploration acreage ▪ 12.39% non-operated interest ▪ 2x wells in 2023 (JDE, Ringhorne) 410 mmboe ▪ FDP substantially agreed; targeting
Slide 14: Andaman Sea: potential opening of a major gas province
Andaman Sea: potential opening of a major gas province in region of growing demand 2022 Harbour operated Timpan-1 exploration well (HBR 40%) de-risks multiple prospects across Andaman Sea acreage ▪ 3 well programme – Layaran, Domestic gas consumption1 mmscf/d Well positioned to access major natural
Slide 15: 2023 drilling programme scaled back following the introduction of the EPL
2023 drilling programme scaled back following the introduction of the EPL Converting UK 2P reserves into production and targeting significant resource additions internationally 2023 Targeting attractive metrics NORTH SEA J-Area J06 x3 Talbot Joc. S <$35/bbl GBA Leverett Callanish F6 Break-even oil p
Slide 16: Strategic ambition to grow and diversify internationally via M&A
Strategic ambition to grow and diversify internationally via M&A M&A must be competitive with organic investments, safeguarding the balance sheet and shareholder returns Supportive environment Disciplined and value Delivering shareholder value through and proven capability focussed criteria accretiv
Slide 17: Addressing our environmental impact and playing a key role in the energy transition
Addressing our environmental impact and playing a key role in the energy transition Pathway to achieving Net Zero by 2035 further clarified ▪ Progressing wide range of activities to reduce emissions 2022 highlights ▪ Net Zero goal embedded within our investment decisions, interim target set ▪ Emissi
Slide 18: Responsibly decommissioning O&G infrastructure which cannot be repurposed for CCS
Responsibly decommissioning O&G infrastructure which cannot be repurposed for CCS Our decommissioning team delivered a strong safety, environmental and cost performance in 2022 ▪ Plugged and abandoned seven wells Heavy lift campaign to remove Vulcan RD ▪ Removed seven platforms ▪ Completed extensive
Slide 19: Strategically located in the Humber, the UK's most CO2 intensive region
Strategically located in the Humber, the UK’s most CO2 intensive region Uniquely positioned to deploy skills and infrastructure to accelerate CCS 2022 highlights Collaboration with ABP provides Viking access to shipped emissions ▪ Viking 300mt contingent CO2 storage independently audited (UK and imp
Slide 20: Financial Review: Robust financial results
Financial Review Robust financial results Higher realised pricing Increased EBITDAX Increased profit before tax Profit after tax $78/bbl, 86p/therm $4.0bn $2.5bn $8m below market prices due to hedges driven by higher production and prices 2021: $315m impacted by $1.6bn EPL tax charge Free cash flow
Slide 21: Increased opportunistic hedging strategy while continuing to protect the downside
Increased opportunistic hedging strategy while continuing to protect the downside Higher realised pricing in 2022 but below market due to hedges; hedging volumes reduce materially over next 3 years Oil price, $/bbl Hedged volumes, kboepd Brent HBR realised, post-hedge, price 101 Realised Oil Gas 80
Slide 22: Income statement: Increased EBITDAX supported by strong operational performance
Income statement: Increased EBITDAX supported by strong operational performance Profit before tax all but offset by tax charge driven by introduction of EPL in the UK $ million 2022 2021 UK EPL disproportionately hits UK focused independents; for Revenue & other income 5,431 3,618 Harbour it all but
Slide 23: Balance sheet: net debt reduced and equity increased
Balance sheet: net debt reduced and equity increased Balance sheet significantly de-levered, decommissioning provisions materially lower but decreased deferred tax asset Assets YE 2022 YE 2021 Equity and liabilities YE 2022 YE 2021 $ million $ million $ million $ million Goodwill 1,327 1,327 Equity
Slide 24: Increased cash generation underpinned by strong operational performance
Increased cash generation underpinned by strong operational performance… …allowed for continued investment, material shareholder distributions and net debt reduction Net debt / cash flow Shareholder distributions made in 2022 $ million $m Buyback $2.1 billion of FCF after tax, capex, financing costs
Slide 25: Robust balance sheet and significant cash generation
Robust balance sheet and significant cash generation Building track record of rapid net debt reduction post M&A and delivering material shareholder distributions Total distributions made / expected to be made in calendar year Net debt $ million $ million c.$1.0 bn 3,000 2023 forecast FCF1 at $85/bbl
Slide 26: Guidance
Guidance 2022 guidance 2022 actual 2023 guidance (as at 1 Jan 2022) Production Production 2023 Production 195-210 kboepd 208 kboepd 185-200 kboepd Operating cost Operating cost Operating cost $15-16/boe $13.9/boe c.$16/boe Total capex Total capex Total capex c.$1.3 billion $0.9 billion c.$1.1 billio
Slide 27: Well positioned for value creation, growth and shareholder returns
Well positioned for value creation, growth and shareholder returns Pure-play upstream, global oil and gas producer ▪ High quality, diverse cash generative portfolio ▪ Attractive international growth opportunities ▪ Track record of disciplined, value-accretive M&A ▪ Well positioned to play a signific