(Alliance News) - Harbour Energy PLC on Thursday warned that it will shift its focus away from the UK, after voicing its discontent that the windfall tax "all but wiped out" its extraordinary annual profit.
In its first year as a publicly listed company, Harbour grew revenue by 50% year-on-year to USD5.43 billion from USD3.61 billion.
The North Sea-focused oil and gas company was born of the merger of Chrysaor Holdings Ltd and Premier Oil PLC, and started trading on London's main market back in April 2021. It had a short-lived stint on the FTSE 100 before being demoted in December, now back in London's midcap FTSE 250 index.
Operational costs rose only by 16% to USD2.85 billion, resulting in a pretax profit of USD2.46 billion - nearly eight times the USD314.5 million in 2021.
However, this was hollowed out by the UK Energy Profits Levy, which ate up around USD1.47 billion in profit. After various other tax expenses, profit stood at just USD8.2 million, down from USD101.1 million the year before.
"[The UK levy] has disproportionately impacted the UK-focused independent oil and gas companies that are critical for domestic energy security," said Chief Executive Officer Linda Cook.
"It has all but wiped out our profit for the year. This has driven us to reduce our UK investment and staffing levels. Given the fiscal instability and outlook for investment in the country, it has also reinforced our strategic goal to grow and diversify internationally," she warned.
Nevertheless, the firm proposed a final dividend of 12 US cents per share for the year, up from 11 cents for 2021. It also approved a new USD200 million share buyback, which will commence "shortly".
In 2022 as a whole, production increase 19% to 208,000 barrels of oil equivalent per day, as unit costs edged down to 8.6% to USD13.9. The realised post-hedging oil price was USD78 per barrel, up from USD54, while UK gas prices jumped to 86 pence per therm from 54p.
The firm reiterated its production guidance for 2023 of 185,000 to 200,000 boepd, with production to the end of February at 202,000 boepd. Unit operating costs are expected to rise to USD16 per boe, due to lower production and inflationary pressures.
At USD85 per barrel and 150p per therm average oil and gas prices, it would expect free cash flow of around USD1.0 billion in 2023, with the potential of being net debt free the following year.
Shares in Harbour Energy were up 0.6% at 288.47 pence each in London on Thursday morning.
By Elizabeth Winter, Alliance News senior markets reporter
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Harbour Energy (HBR)