HBRIY - Harbour Energy plc (PMOIF) Q4 2024 Earnings Call Transcript

2025-03-06 19:21:11 ET

Harbour Energy plc (PMOIF)

Q4 2024 Earnings Conference Call

March 06, 2025 04:00 AM ET

Company Participants

Elizabeth Brooks - Head, Investor Relations

Alexander Krane - Chief Financial Officer

Linda Cook - Chief Executive

Alan Bruce - Executive Vice PresidentTechnical Services

Michael Zechner - Managing Director, Norway Business Unit

Martin Rueda - MD, Argentina

Gustavo Baquero - Executive Vice President, Strategy, Business Development & Energy Transition

Graeme Davies - Executive Vice President, Carbon Capture & Storage

Conference Call Participants

Lydia Rainforth - Barclays

Matt Smith - Bank of America

Chris Wheaton - Stifel

James Carmichael - Berenberg

Sasikanth Chilukuru - Morgan Stanley

Werner Riding - Peel Hunt

Mark Wilson - Jefferies

Presentation

Operator

Good morning and welcome to the Harbour Energy Full Year Results 2024 and Capital Markets Update. After the presentation, there will be a short break and we will then take your questions.

Elizabeth Brooks

Hello and welcome to Harbour Energy's 2024 full year results presentation and capital markets update. My name is Elizabeth Brooks and I'm Head of Investor Relations for Harbour Energy.

In September of last year, as many of you know, we completed the acquisition of a large portfolio of assets from WintershallDea. This was our fourth acquisition in seven years and our most transformational, marking a step change in our scale, global presence, and financial strength.

Our objectives today are to showcase the quality and potential of our portfolio, highlight the diversity and sustainability of our business, and outline our priorities for the future.

First, Alexander Krane, our Chief Financial Officer will take you through our 2024 results. Then we'll have our capital market update hosted by our Chief Executive, Linda Cook along with other members of our senior leadership team. And there will be plenty of time for Q&A at the end.

But for now, I'll hand you over to Alexander for our 2024 results. Alexander?

Alexander Krane

Thank you and good morning to everyone joining us today. 2024 was a truly transformational year for Harbour Energy with the completion of the WintershallDea acquisition. We will hear the significant benefits and optionality this has brought us in our capital markets update later this morning.

But I wanted to start with this slide to demonstrate the step change we've seen and will see in full over 2025 as a result of that acquisition. At a point in history when there is a lot of uncertainty, a lot of unrest, and a lot of volatility in financial markets, we are more convinced than ever that the strategy we've set out and kept unchanged for years is the right one for an independent oil and gas company.

We have scale and we are lowering costs in GAG emissions intensity. We also have diversification, not only geographic diversity, but also diversity in our revenue streams since we sell a mix of crude, European gas, and international gas.

We also target low leverage, looking to reduce our debt after each major acquisition and we hedge actively a significant part of our oil and gas sales. And collectively, this means that we are generating material and resilient cash flow that puts us in a strong financial position with potential for material additional shareholder distributions.

Moving to our 2024 highlights. At the same time as completing this transformational acquisition, we also continue to deliver operationally and financially. We materially increased and diversified our production to 258,000 barrels of oil equivalent per day. We more than tripled our reserves and resources and we made considerable progress with our strategic investment opportunities of which we'll have more later.

We increased our revenue and EBITDAX to approximately $6 billion and $4 billion, up about 65% and 50% respectively. And as a result of the acquisition, achieved investment-grade credit ratings. And this is just a start. Our 2024 results reflect just four months contribution from the acquired portfolio with the full benefits of the acquisition coming through in 2025.

This slide shows the full potential of the portfolio coming through it in the fourth quarter of 2024 with production levels averaging around 500,000 barrels of oil equivalents per day. Furthermore, we've maintained these levels in the first two months of 2025.

In addition to the acquisition, we also benefited from new wells and projects on stream in the latter part of last year including in the U.K., Norway, and Argentina. Costs were stable at $16.50 per BOE over the course of 2024 with the addition of the lower cost acquired portfolio, offsetting higher unit operating costs in the UK. Going forward, our operating costs will be materially lower as you will hear more about shortly.

In 2024, total capital expenditure increased to $1.8 billion compared to $1 billion last year. Of the $800 million increase 80% is related to the four months contribution from the Wintershall Dea portfolio. In addition, we accelerated drilling around our operator hubs in the UK taking advantage of some certainty in the UK fiscal regime ahead of the changes last November.

We delivered good results from the capital program, which was mainly focused on infrastructure-led opportunities and converting reserves into production and cash flow. Notably here, production started up from the Phoenix projects in our conventional offshore CNH one license in Argentina, while here in the UK we delivered first oil from our tower project.

In addition, we acquired an interest in an exciting FLNG project in Argentina which has the potential to accelerate the development of our huge Vaca Muerta resource. We had exploration success in the UK and in Norway, but also further our fields in Mexico and Indonesia. This included confirming a 100 million-barrel plus oilfield at Kan and completing a multi-well campaign in Indonesia, which derisked a multi-TCF gas pay across our Andaman acreage....

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