Harbour Energy ups dividend despite £1bn tax hit

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Oil prices have risen as Israel and Iran tensions escalated.
Oil prices could top $150 per barrel, analysts have warned.

Harbour Energy has reiterated its commitment to return $200m (£160m) to shareholders this year in dividends despite a huge cash outflow from the government’s windfall tax.

In a trading update ahead of its annual general meeting (AGM) the company said it has proposed a final dividend for the year of 13c per share, up from 12c per share last year (up nine per cent).

This would meet the company’s commitment to return $200m (£160m) a year in dividends to investors Harbour said.

It added that it produced 172,000 barrels of oil equivalent (kboepd) in the first quarter of the year, split equally between liquids and natural gas. That was down from 202 kboepd in the first quarter. Harbour reiterated its production guidance for 2024 of 150 to 165 kboepd.

The company said that at a price of $85 per barrel of oil (production is hedged at $83 per barrel) it is expected to be “marginally free cash flow positive in 2024, after estimated tax payments of c.$1bn (£800m).”

Harbour Energy has been a vocal critic of the government’s windfall tax, called the Energy Profits Levy, which Jeremey Hunt extended to 2029 in the Spring Budget earlier this year.

However, the company added it “expects to generate significantly higher free cash flow next year resulting in a net cash position by year end 2025.”

It ended the year with net debt of $0.1bn after fees associated with the Wintershall DEA acquisition.

At the end of December last year, Harbour signed a deal with BASF and Letterone to acquire Wintershall Dea’s upstream oil and gas assets for $11.2bn (£9bn). When completed, the deal will boost the company’s presence in Algeria, Argentina, Denmark, Egypt, Germany, Libya, Mexico and Norway.

At the time of the deal, the firm said the merger would add 1.1bn barrels of oil equivalent (boe) of 2P reserves to its portfolio at an estimated cost of $10/boe and boost production by more than 300,000kboepd.