Strong operational delivery drives free cash flow upgrade;
$100 million share buyback announced
Harbour announces its unaudited half-year results for the six months ended 30 June 2025.
Linda Z Cook, Chief Executive Officer, commented:
"Harbour delivered strong first-half results driven by excellent operational execution and reflecting the benefits of the Wintershall Dea acquisition which significantly enhanced the scale, resilience and longevity of our business, supporting significant free cash flow generation.
Through the integration of the Wintershall Dea portfolio and in the midst of market volatility, we took decisive action to strengthen our margins, high-grade our capital programme and accelerate cost initiatives. These steps, along with the strong results from the first half, have enabled us to upgrade our free cash flow outlook for the year. In addition, we improved our financial position by addressing near-term bond maturities and reducing net debt. As a result, we remain confident in our ability to deliver on our capital allocation priorities. These include further debt reduction and additional shareholder returns via share buybacks, as demonstrated by the new $100 million buyback programme announced today."
Strong operational delivery; growth opportunities matured
§ Increased and diversified production of 488 kboepd (H1 2024: 159 kboepd)
§ Unit operating costs c.30% lower at $12.4/boe (H1 2024: $18.5/boe)
§ Safety incident rate (TRIR) of 1.1 per million hours worked (H1 2024: 0.7)
§ Net equity GHG intensity more than halved to 12 kgCO2/boe (H1 2024: 27 kgCO2/boe)
§ New wells on-stream including at Maria Phase 2 (Norway), the Vaca Muerta (Argentina) and in the UK; approved developments on track including start-up of Dvalin North (Norway) in late 2026
§ Investment decision taken on Southern Energy SA, a 6 mtpa phased LNG project in Argentina, creating the potential to unlock significant value for our Vaca Muerta gas
§ Kan (Mexico) gross 2C resources estimate upgraded by 50% to c.150 mmboe (Harbour share 70%)
§ Completed divestment of the Vietnam business on 9 July, post-period end, marking an exit from the country
Significant free cash flow generation; strong financial position
§ Realised post-hedge oil and European gas prices of $71/bbl and $13/mscf (H1 2024: $85/bbl and $8/mscf), respectively
§ Increased revenue and other income of $5.3bn (H1 2024: $1.9bn) and EBITDAX of $3.9bn (H1 2024: $1.2bn)
§ Increased free cash flow of $1.36bn (H1 2024: $0.38bn); net debt[1] excluding unamortised fees reduced to $3.8bn (YE 2024: $4.7bn) and leverage reduced to 0.5x (YE 2024: 1.1x)
§ Reported loss after tax of $0.2bn (H1 2024: profit $0.1bn) impacted by $0.3bn deferred tax charge associated with changes to the UK fiscal regime and $0.2bn of net foreign exchange losses
§ Increased adjusted profit after tax of $0.4bn (H1 2024: $0.1bn) equating to higher adjusted earnings per voting ordinary share of 22 cents (H1 2024: 11 cents)
§ Successful issuance of $0.9bn of senior notes and €0.9bn of subordinated notes, effectively pre-funding all maturities to 2028
§ Investment grade credit ratings with stable outlook confirmed
Improved 2025 outlook; increased shareholder distributions
§ Production guidance further narrowed upwards to 460-475 kboepd (from 455-475 kboepd), with the divestment of Vietnam more than offset by strong production performance to date
§ Unit operating cost guidance lowered to c.$13.5/boe (previously c.$14/boe)[2], reflecting the improved production outlook, cost savings and divestment of Vietnam partially offset by the weaker US dollar
§ Total capital expenditure guidance unchanged at $2.4-$2.5bn
§ Free cash flow outlook increased to c.$1.0bn (from $0.9bn)[3], driven by continued strong operational delivery
§ Interim dividend of $227.5m, 13.19 cents per voting ordinary share (H1 2024: 13.00 cents), in line with $455m annual dividend policy
§ New $100m share buyback programme announced, bringing expected total payout of free cash flow to c.55% for the year[4]
Notes to editors
Unless stated otherwise all figures are in US dollars. Comparative figures for the income statement relate to the period ended 30 June 2024 and the balance sheet as at 31 December 2024. Alternative performance measures, including EBITDAX and free cash flow, are reconciled within the Glossary - Non IFRS measures at the end of the Financial Statements.
We have introduced alternative performance measures in our financial reporting covering adjusted EBITDAX, adjusted profit after taxation, adjusted effective tax rate and adjusted earnings per share. These are indicators that management consider better reflect our true underlying operational and financial performance in the period and facilitate a more meaningful period on period comparison. Full details of our alternative performance measures, including a reconciliation to the closest reported IFRS measure where applicable, can be found in the Glossary - Non IFRS measures at the end of the financial statements.
Summary of 2025 half-year performance
Step change in production
Production in the first half averaged 488 thousand barrels of oil equivalent per day (kboepd) (H1 2024: 159 kboepd), split approximately 40 per cent liquids, 40 per cent European natural gas and 20 per cent other natural gas. The more than 200 per cent increase versus the first half of 2024 reflects the addition of the Wintershall Dea portfolio, including 173 kboepd from Norway and 75 kboepd from Argentina.
Production was supported by new projects and wells on-stream, and improved reliability across the portfolio with operating efficiency of 93 per cent. In addition, we saw strong subsurface delivery from our operated hubs in the UK and from the recently completed Fenix project in Argentina which also benefitted from strong local gas demand.
Full year 2025 production guidance is further narrowed upwards to 460-475 kboepd (455-475 kboepd previously). This reflects the first half results, July production of 493 kboepd, good progress to date on the summer maintenance shutdowns and the outlook for the remainder of the year, all more than offsetting the impact of the Vietnam divestment (c.2 kboepd annualised) which completed post period end.
Strong cost and capital discipline
We materially reduced our unit operating costs to $12.4/boe (H1 2024: $18.5/boe), reflecting the addition of the lower cost Wintershall Dea portfolio, strong volumes and supply chain synergies captured from leveraging our increased scale. Full year 2025 unit operating cost guidance is lowered to c.$13.5/boe. This reflects our improved production outlook, continued cost control and the sale of our high-cost Vietnam business partially offset by our weaker US dollar (USD) outlook of $1.35/£.
In May, Harbour took the decision to reduce its Aberdeen-based organisation by c.25 per cent to lower its UK cost structure and align with reduced levels of investment in the country given the challenging domestic fiscal environment. The reorganisation is on track to complete by the end of the third quarter.
Total capital expenditure for the period was $1.1 billion (H1 2024: $0.6 billion), driven by the addition of the Wintershall Dea portfolio partially offset by reduced UK investment. Previously narrowed full year guidance of $2.4-$2.5 billion is reiterated.
A focus on safe and responsible operations
We remain focused on embedding a strong safety culture across our expanded operations. While progress is being made, our total recordable injury rate (TRIR) during the first half was higher at 1.1 per million hours (H1 2024: 0.7), in part reflecting the higher TRIR from the Wintershall Dea portfolio. As part of the integration of the Wintershall Dea assets, we completed a comprehensive Major Accident Hazard risk assessment across the expanded portfolio; the results are being used to prioritise our safety improvement activities.
In the first half we delivered a step change in our GHG intensity which materially reduced to 12 kilograms of CO2 per barrel of oil equivalent (kgCO2e/boe) (H1 2024: 27 kgCO2e/boe) on a net equity share basis reflecting the lower emissions intensity of the Wintershall Dea portfolio. We remain on track to halve our gross operated emissions by 2030 compared to our 2018 baseline.
Maximising value from our producing assets
Harbour's 2025 capital investment is largely focused on infrastructure-led opportunities, converting reserves into production and cash flow. These opportunities are typically low risk, high return, short cycle investments concentrated around our existing production hubs, predominantly in Norway, the UK and Argentina.
In Norway, we delivered first oil in May from our operated Maria Phase 2 project, a four well tie-back to the Maria infrastructure. The first well was safely delivered on schedule and within budget with the remaining wells expected online by year end. At Harbour's operated Dvalin North project, installation of the subsea infrastructure is significantly progressed with development drilling on track for 2026. Subsea installation campaigns are also underway at Alve North and Idun North, both being developed as multi-well tie-backs to Skarv, and at the Irpa three well tie-back to Aasta Hansteen. These projects - as well as infill drilling campaigns, including at Njord - will help support Harbour's near-term production in the country.
In the UK, Harbour's investment in the first half was targeted at our two largest operated hubs, J-Area and the Greater Britannia Area (GBA). At J-Area, Jocelyn South was brought on-stream in March through Harbour's Judy platform, just three months after discovery while, post period end, production started up from the RK development well. Following completion of its planned maintenance shutdown, contributions from these wells - together with continued strong subsurface performance from Talbot - resulted in J-Area achieving production rates not seen since 2013. The first half also saw continued outperformance from GBA's satellite fields Callanish and Brodgar, with Brodgar production supported by further plant optimisation and the H5 development well which was successfully brought online in May.
In Argentina, at our offshore CMA-1 concession in the Tierra del Fuego province, the Fenix project was completed with the third well on-stream in January while a workover at the Aries platform was successfully executed ahead of schedule. Onshore in the Vaca Muerta unconventional shale play, nine new gas wells were drilled and six new wells were completed and connected during the first half, helping to maintain production from the Aguada Pichana Este concession which is currently facilities constrained.
Elsewhere, development activities across our three production hubs in Germany - Mittelplate, Gas Nord and Emlichheim - continued to support stable production, while in Egypt the first of two Raven West infill wells at West Nile Delta was brought on-stream in February. In Indonesia, a two well development campaign at Natuna Sea Block A commenced with production start-up from the first well anticipated in the second half of the year.
A large and diverse 2C resource base with the potential for material reserves replacement
Our 1.9 billion barrels of oil equivalent (bnboe) of 2C resources are split broadly equally between high value, near infrastructure offshore opportunities, including in Norway and Argentina; the Vaca Muerta shale play onshore Argentina; and conventional offshore growth projects in Mexico and Indonesia. Our focus is on maturing the most competitive projects within this resource base into 2P reserves to support long term production.
In Norway, we continued to progress our pipeline of early phase projects. The Gjøa subsea satellite projects, Gjøa Nord and Ofelia, are being matured to a 2026 final investment decision while development concept studies are underway at Adriana/Sabina and Storjo (appraised in 2024) and Cuvette (discovered in 2024). The first half also saw exploration success with a small discovery at the Skarv-E prospect close to our Skarv infrastructure.
In Argentina, Harbour and its partners took final investment decision (FID) in May on Southern Energy SA (Harbour 15 percent interest), a phased two-vessel LNG project with total capacity of six million tonnes per year (mtpa). This marks a significant milestone, providing access to global markets for our extensive Argentinian gas resource with the potential to accelerate the development of our Vaca Muerta acreage. Production start-up from the first vessel (Golar Hilli Episeyo) is expected around year end 2027, with the second vessel (Golar MK II) anticipated to commence operations end 2028. Southern Energy has also received approval under Argentina's RIGI legislation which offers a range of investment, tax and foreign exchange incentives for large projects, and was granted Argentina's first LNG export permit in April.
Also, in Argentina at the San Roque concession, following a successful four-well pilot project in the oil window of the Vaca Muerta shale, discussions to secure the unconventional licence are progressing between partners and the government. In addition, post period end, our conventional CMA-1 licences offshore Tierra del Fuego were successfully extended to 2041, strengthening our ability to add additional 2P reserves from our existing assets through further development activity.
In Mexico, we are focused on the development of our most competitive projects, Kan and Zama, which together could yield reserves equivalent to over two years' worth of Harbour's total production. Following completion of a successful appraisal programme, we increased the gross resource estimate of the Harbour-operated Kan field (Harbour 70 per cent) by 50 per cent to c.150 million barrels of oil equivalent (mmboe). Development options for Kan are now being evaluated ahead of entering FEED (front-end engineering design). At Zama (Harbour 32 per cent), discussions are progressing with partners around a phased development concept. At c.750 mmboe gross resources, Zama is Mexico's largest undeveloped discovery.
In Indonesia, we continue to evaluate development options for the multi-trillion cubic feet (TCF) Andaman gas discoveries, including the potential for a phased development starting with the Tangkulo field.
High-grading the CCS portfolio
We continue to selectively mature our most advantaged CCS projects while moving to exit less competitive licences.
At our operated Viking project (Harbour 60 per cent) in the UK, FEED was completed in March and the development consent order for the onshore pipeline was approved in April. In light of continued UK government delays impacting the overall project schedule, we welcomed the Chancellor's announced intention to provide development funding up to a final investment decision.
In Denmark, the high return Greensand Future project (Harbour 40 per cent) is on track to commence commercial operations from 2026 with an injection rate of 400 thousand tonnes per annum (ktpa). Onshore Denmark, Harbour has a 40 per cent operated interest in Greenstore which is in the appraisal phase with seismic acquisition planned for later this year.
In May, in line with the Havstjerne licence commitment, we delivered a CO2 storage appraisal well in the Norwegian North Sea safely and below budget.
Integration progressing as planned; active portfolio management
We have a proven track record of acquisitions, integration and actively managing our portfolio. The integration of the acquired Wintershall Dea portfolio is progressing as planned and we are on track to exit the Transitional Service Agreement by the end of the third quarter.
We continue to actively manage our portfolio to ensure our capital and resources are deployed in line with our strategy. To this end, we completed the sale of our Vietnam business to EnQuest post period end (on 9 July), marking a country exit for Harbour.
Significant cash flow generation and strong financial position
In the first half of the year, we generated $1.36 billion of free cash flow, reflecting strong production and the second half weighting of our tax payments and summer maintenance programmes. This significant cash flow was directed towards payment of our final 2024 dividend of $227.5 million in May and reducing our net debt by $0.9 billion to $3.8 billion at 30 June, in line with our capital allocation priorities. The impact of the weaker USD increasing the USD value of our pre-swap Euro-denominated senior bonds by $0.7 billion was partially offset by the net addition of $0.4 billion of subordinated notes issued during the period.
We actively manage our debt currency mix and interest rate exposure through interest rate derivatives. At 30 June, c.60 per cent of our senior debt was USD denominated on a post-swap basis compared to c.20 per cent on a pre-swap basis, resulting in a mark to market gain of $0.2 billion on our cross-currency swap portfolio.
During the first half, we issued $0.9 billion of senior notes and €0.9 billion of perpetual subordinated notes, concurrently repurchasing $0.3 billion and €0.5 billion of the 2026 senior and perpetual subordinated notes callable in 2026. As a result, we have effectively pre-funded all our maturities through to 2028, including the €1.0 billion of senior notes maturing in September 2025, which, along with now being fully undrawn on our revolving credit facility, results in expected total debt repayment of c.$0.6 billion during 2025 on a constant currency basis. The first half also saw our investment grade credit ratings of Baa2 and BBB- with stable outlook reconfirmed by Moody's and Fitch, respectively.
During the first half we realised post-hedge oil and European gas prices of $71 per barrel (bbl) (H1 2024: $85/bbl) and $13 per thousand standard cubic feet (mscf) (H1 2024: $8/mscf), respectively. This compares to average Brent oil prices of $72/bbl and European gas prices of $13/mscf during the first half of 2025. Looking ahead, we benefit from a strong hedge position with a mark to market gain of $0.4 billion at 30 June. For the 18 months through to the end of 2026, we have hedged approximately 40 per cent of our economic exposure to Brent and 50 per cent of our economic exposure to European gas prices at prices above the current forward curve.
Improved outlook including for shareholder distributions
As a result of our continued strong operational delivery and improved production and cost outlook, we have increased our 2025 free cash flow outlook by $0.1 billion to $1.0 billion, assuming $68/bbl and $12.7/mscf for the full year.
In line with our $455 million annual dividend commitment ($380 million paid on the voting ordinary shares), the Board is today declaring an interim dividend for 2025 of $227.5 million, equating to 13.19 cents per voting ordinary share. The interim dividend will be paid on 24 September 2025 to all shareholders on the register as at 15 August 2025.
In addition, given the significant progress towards delivering our $0.5 to $1.0 billion debt reduction target and confidence in our ability to continue to sustain material cash flow through the commodity price cycle, we are today announcing the commencement of a $100 million share buyback programme. Assuming the buyback completes by year end, this brings our outlook for total distributions to shareholders in 2025 to $555 million, up from $200 million in 2024. Based on our free cash flow outlook of c.$1.0 billion, this represents an estimated payout ratio of c.55 per cent.
Revenue and other income
Total revenue and other income increased to $5,271 million (H1 2024: $1,916 million).
Revenue earned from production activities increased to $5,181 million (H1 2024: $1,906 million) after realised hedging losses of $28 million (H1 2024: loss of $55 million). This increase was mainly driven by higher production volumes and higher European gas prices partially offset by lower crude prices.
Crude oil sales increased to $1,796 million (H1 2024: $1,114 million) after realised hedging gains of $35 million (H1 2024: gains of $1 million). This was driven by higher production volumes partially offset by lower realised post-hedging oil prices of $71/bbl (H1 2024: $85/bbl).
Gas revenue was $3,084 million (H1 2024: $692 million), split between European gas revenue of $2,737 million (H1 2024: $638 million), after realised hedging losses of $63 million (H1 2024: $56 million), and other gas revenue of $347 million (H1 2024: $54 million). The realised post-hedging price for European and other gas was $13/mscf (H1 2024: $8/mscf) and $3.5/mscf (H1 2024: $13/mscf), respectively.
Condensate revenue was $267 million (H1 2024: $81 million) and tariff income was $34 million (H1 2024: $19 million). Other income amounted to $90 million (H1 2024: $10 million) which includes partner recovery on lease obligations and government subsidies in Argentina.
Cost of operations
Cost of operations increased to $2,721 million (H1 2024: $1,178 million) driven primarily by the increased production levels in the enlarged group and hence higher operating costs and depreciation of oil and gas assets.
Total operating costs were higher period on period at $1,091 million (H1 2024: $534 million). Operating costs were lower on a unit of production basis at $12.4/boe (H1 2024: $18.5/boe) due to increased production, relatively lower operating costs within the recently acquired business units and disciplined cost control, particularly in the UK.
Depreciation, depletion and amortisation (DD&A) unit expense, which reflects the capitalised costs of producing assets divided by produced volumes, was $17/boe (H1 2024: $20/boe).
EBITDAX and Adjusted EBITDAX
EBITDAX was $3,876 million (H1 2024: $1,216 million), with the increase driven by higher production and higher European gas prices. Adjusted EBITDAX, adjusting for M&A and restructuring costs, was $3,888 million (H1 2024: $1,250 million).
Impairments and Exploration Write Offs
The Group has recognised a pre-tax impairment charge on property, plant and equipment of $186 million (H1 2024: $33 million). This primarily arose on assets in our UK business unit, which continues to face a challenging fiscal and regulatory environment, as a result of lower short-term commodity prices.
During the period, the Group expensed $97 million (H1 2024: $39 million) for exploration and appraisal and CCS activities, nearly half of this related to the Havstjerne licence commitment CCS appraisal well in Norway.
Net financing costs
Finance income amounted to $432 million (H1 2024: $15 million). The increase compared to H1 2024 is mainly due to realised gains on foreign exchange forward contracts of $213 million (H1 2024: $1 million), unrealised gains on derivatives and financial instruments of $95 million (H1 2024: nil), and interest income on higher cash balances resulting from increased operating cash flow and bond issuances of $71 million (H1 2024: $13 million).
Finance expenses amounted to $818 million (H1 2024: $165 million). This primarily included foreign exchange losses of $504 million (H1 2024: $5 million), comprising $230 million (H1 2024: $nil) from the revaluation of UK and Norwegian cash tax liabilities and $193 million (H1 2024: $13 million gain) from the revaluation of USD-denominated intercompany balances in entities with non-USD functional currency. It also included interest and expenses incurred of $116 million (H1 2024: $43 million) related to debt facilities, bonds and leases and unwinding of the discount on decommissioning provisions of $145 million (H1 2024: $92 million) which increased due to the larger asset portfolio.
Earnings and taxation
Tax expense increased in H1 2025 to $1,809 million (H1 2024: $335 million). The reported effective tax rate is 111 per cent per cent (H1 2024: 85 per cent) which is higher than the headline rate of 78 per cent due to the impact of the extension of the UK Energy Profits Levy (EPL) from 2028 to 2030 and non-deductible unrealised foreign exchange losses. The Adjusted effective tax rate was 80% (H1 2024: 82%). The tax expense is split between a current tax expense of $2,003 million (H1 2024: $226 million) and a deferred tax credit of $194 million (H1 2024: charge of $109 million).
Reported loss after tax amounted to $174 million (H1 2024: $57 million profit). This resulted in reported loss per voting ordinary share of 12 cents (H1 2024: earnings 7 cents per share). Adjusted profit after taxation amounted to $410 million (H1 2024: $86 million) of which $33 million was attributed to the subordinated notes holders and $377m was attributable to shareholders. This resulted in adjusted basic earnings per voting ordinary share of 22 cents (H1 2024: 11 cents per share).
Shareholder distributions
A final dividend with respect to 2024 of 13.19 cents per ordinary share was proposed on 6 March 2025 and approved by shareholders at the AGM on 8 May 2025. The dividend was paid on 21 May 2025 to all shareholders on the register as at 11 April 2025, totalling $228 million.
In line with the company's annual dividend policy, the Board is pleased to announce an interim dividend of 13.19 cents per voting ordinary share, totalling $228 million, to be paid on 24 September 2025 to all shareholders on the register on 15 August 2025 (the "Record Date"). A dividend reinvestment plan ("DRIP") is available to shareholders who would prefer to invest their dividend in the shares of the company. To participate in the DRIP, shareholders must submit their election notice to Equiniti, the company's Registrar, by 3 September 2025 (the "Election Date").
The Board has also approved and is pleased to announce a share buyback programme of the Company's voting ordinary shares for up to a maximum aggregate consideration of $100 million. Pursuant to the authority granted by shareholders at the AGM held on 8 May 2025, the maximum number of ordinary shares which may be purchased by the Company is 215,873,417. The purpose of the programme is to reduce the Company's share capital and all ordinary shares purchased as part of this programme will be cancelled. The programme will commence on 8 August 2025, and will end no later than 31 March 2026.
Statement of Financial Position
Assets
The increase in total assets of $2,270 million from $30,321 million to $32,591 million is mainly due to the increase in cash balances from $805 million to $2,711 million resulting from positive free cash flow in the period, the two bond issuances, net of repayments, and other financial assets increasing from $189 million to $782 million, predominantly due to an increase in the value of commodity and foreign exchange derivatives.
Liabilities
The increase in total liabilities of $2,084 million from $24,070 million to $26,154 million is driven by increases in a number of factors including:
§ deferred tax of $664 million, mainly due to the tax effect of the increase in fair value of derivatives and the revaluation of the deferred tax to reflect the extension of the energy profits levy, offset by other items;
§ borrowings of $1,080 million due to the $0.9 billion bond issuance in the period, net of $0.6 billion debt repayments adjusted for $0.7 billion of FX and amortised fees;
§ current tax liability of $722 million due to the addition of material Norway tax payables into our portfolio and the phasing of payment of these to the second half of the year;
§ decommissioning provisions of $339 million mostly due to currency translation movement and unwinding of the provisions, offset by payments in the period;
§ trade and other payables of $165 million; offset by
§ a reduction in other financial liabilities of $761 million due to lower derivative liabilities.
The net deferred tax position on the balance sheet is a liability of $6,738 million (Dec 2024: $6,091 million) after reclassification for assets held for sale. This is primarily made up of deferred tax liabilities in respect of the accelerated capital allowances ($9,612 million) offset by deferred tax assets related to future decommissioning liabilities ($2,889 million).
Equity and reserves
Total equity increased to $6,437 million mainly due to the new issuance of subordinated notes in the period of $970 million less the repayment of $558 million of existing notes. This net increase was offset by the dividend payment to shareholders of $228 million and the reported loss for the period of $174 million. Comprehensive income amounted to $190 million, comprising predominantly $1,103 million of gains on cash flow hedges, partly offset by the associated tax expense ($725 million) and $191 million of foreign exchange adjustments.
Net debt
As at 30 June 2025, net debt was $3,598 million (Dec 2024: $4,424 million). This consisted of borrowings amounting to $6,559 million (Dec 2024: $5,512 million) less unamortised fees of $250 million (Dec 2024: $283 million) and cash balances of $2,711 million (Dec 2024: $805 million). The reduction in net debt was driven by the free cash flow generated in the period and net cash from the issuance and repayment of subordinated notes partially offset by the impact of foreign exchange differences due to the weaker US dollar.
We have pre-funded our near-term debt maturities out to 2028. Our investment grade rating was reaffirmed by Moody's (Baa2) and Fitch (BBB-) during the period. Available liquidity, being undrawn revolving credit facility (RCF) of $3.0 billion net of letters of credit drawn of $0.6 billion, plus cash balances of $2.7 billion, was $5.1 billion at the end of the period, compared with $1.9 billion at year end 2024.
As at 30 June 2025, the leverage ratio was 0.5x (Dec 2024: 1.1x) which has reduced due to material net debt reduction during the period.
Derivative financial instruments
We carry out hedging activity to manage commodity price risk, and to ensure there is sufficient funding for future investments. As part of that, we have entered into a series of fixed-price sales agreements and a financial hedging programme for both oil and gas, consisting of swap and option instruments. Hedges realised to date are in respect of both crude oil and European natural gas.
At 30 June 2025, our financial hedging programme on commodity derivative instruments showed a pre-tax positive mark-to-market fair value of $439 million (H1 2024: negative $102 million). Most of the commodity derivatives were designated as cash flow hedges, therefore, changes in fair value were reported in other comprehensive income. The ineffectiveness credit to the income statement for the period was $40 million (H1 2024: $nil)
For foreign exchange derivative instruments, the pre-tax positive mark-to-market fair value was $214 million (H1 2024: positive $1 million). Of this total $171 million related to cross-currency interest rate swaps designated as cash flow hedges relating to the Euro bonds where €2.4 billion was hedged at a forward rate of between 1.1015 and 1.1209.
Statement of cash flows1
Net cash from operating activities after tax amounted to $2,446 million (H1 2024: $953 million) after accounting for positive working capital movements of $197 million (H1 2024: $89 million positive), net of movement in realised but unsettled hedges of $3 million (H1 2024: $51 million). The Group made net tax payments of $1,350 million in the period (H1 2024: $157 million) primarily in relation to Norway ($1,064 million) and the UK ($247 million)
Capital investment on a cash basis was $960 million (H1 2024: $349 million) which included property, plant and equipment spend of $724 million (H1 2024: $199 million), and exploration and evaluation spend of $185 million (H1 2024: $113 million).
Cash outflow from financing activities, excluding shareholder distribution and debt principal movements, totalled $202 million (H1 2024: $241 million) split between interest payments of $47 million (H1 2024: $87 million), and lease principal and interest payments of $155 million (H1 2024: $154 million).
Financing activities in the period included the issuance of a $900 million bond and $970 million (€900 million) subordinated notes together with repayments on existing bonds of $262 million and subordinated notes of $558 million. Further, the RCF drawdown of $250 million as at 31 December 2024 was repaid such that at period end the facility was undrawn.
Shareholder distributions consist of dividends paid of $228 million (H1 2024: $100 million) and $38 million was paid to subordinated notes holders.
Cash and cash equivalent balances were $2,711 million (31 Dec 2024: $805 million) at the end of the period.
Capital investment is shown in the table below and is defined as additions to property, plant and equipment, fixtures and fittings and intangible exploration and evaluation assets, excluding changes to decommissioning assets.
During the period, the Group incurred total capital expenditure of $1,123 million (H1 2024: $587 million), split by capital investment $943 million (H1 2024: $462 million) and decommissioning spend $180 million (H1 2024: $125 million).
The capital investment was concentrated around our existing production hubs, predominantly in Norway, the UK and Argentina. For further detail see section above 'Maximising value from our producing assets'.
Post balance sheet events
On 9 July Harbour completed the disposal of the Vietnam business to EnQuest plc for a headline value of $85 million with an effective date of 1 January 2024.
On 11 July 2025, the German Federal Council passed legislation mandating annual 1 per cent reductions in the Federal Corporate Income Tax rate starting from 2028 through to 2032. Including Trade Tax, Germany's headline tax rate is expected to reduce from approximately 32 per cent to an estimated 27 per cent. As the legislation was not substantively enacted at the balance sheet date, its effects have not been reflected in the results for the period. If enacted, it would have reduced the Group's deferred tax liability by an estimated $66 million.
In prior periods, the Group disclosed a contingent liability, estimated at up to $137 million as at 30 June 2025, in certain UK subsidiaries in respect of an uncertain tax position related to the fair value movements and realised gains and losses on derivative instruments entered into to hedge commodity price risk. In the first half of 2025, HMRC completed a thorough review of this matter and, subsequent to 30 June, confirmed that the Group's filed tax position requires no adjustments. Consequently, the uncertainty has been resolved and no financial impact results from this resolution, as no liability was recognised in prior periods.
The Board approved a share buyback programme of the Company's voting ordinary shares for up to a maximum aggregate consideration of $100 million. The purpose of the programme is to reduce the Company's share capital and all ordinary shares purchased as part of this programme will be cancelled. The programme will commence on 8 August 2025, and will end no later than 31 March 2026.
Going concern
The results have been presented on a going concern basis. Detail of the Group's assessment of going concern for the period can be found within note 2 to the financial statements.
Business risks
Harbour faces various risks that could result in events or circumstances that might negatively impact the company's business model, its future performance, liquidity, and reputation. Not all these risks are wholly within the company's control and the company may also be affected by risks which have not yet materialised or are not reasonably foreseeable.
The effective management of risk is critical if we are to continue to successfully execute the strategy and to protect our personnel, assets, the communities with whom we interact, and our reputation.
For known risks facing the business, the company seeks to reduce the likelihood and mitigate the impact of the risk to within the level of appetite or tolerance set by the Board. According to the nature of the risk, the company can choose to take or tolerate risk, treat risk with mitigating actions, transfer risk to third parties, or terminate risk by ceasing particular activities or operations. In particular, the company has a zero tolerance stance to fraud, bribery, corruption, and the facilitation of tax evasion. We also aim to manage health, safety, and environmental and security risks to a level as low as reasonably practicable.
Principal risks at half-year 2025 and key changes since the 2024 Annual Report
The directors have reviewed the principal risks facing the company and concluded for the remaining six months of the financial year there are no significant changes to the headline principal risks from those disclosed in the 2024 Annual Report and Accounts. In conducting their review, the directors noted an increase in global geopolitical uncertainty over the period and so have amended the fourth principal risk headline below to recognise political and fiscal risks whether they emanate from host countries or from others.
To reach this conclusion, the directors considered the changes in the external environment during the recent period that could threaten the company's business model, future performance, liquidity, and reputation. The directors also considered management's view of the current risks facing the company.
A full description of Harbour's principal risks can be found on pages 64 to 69 of the 2024 Annual Report and Accounts.
The principal risks are now summarised as:
§ Execution of the strategy: failure to effectively implement the strategy
§ Health, safety and environment: risk of a major health, safety, environmental or physical security incident
§ Organisation and talent: failure to create and maintain a cohesive organisation with sufficient capability and capacity
§ Political and fiscal risks: exposure to adverse or uncertain political, regulatory or fiscal developments
§ Operational performance: failure to deliver expected operational performance
§ Capital programme and delivery: failure to deliver the capital programme as planned
§ Third party reliance: failure to adequately manage joint venture partners, third-party infrastructure owners, supply chain contractors and other partners
§ Financial discipline: failure to work within our financial framework to implement the company's strategy
§ Commodity prices: exposure to the impact of commodity price fluctuations on the business
§ Cyber and information security: failure to maintain safe, secure and reliable information systems
§ Legal and regulatory compliance: failure to maintain and demonstrate effective legal and regulatory compliance
§ Climate Change and Energy transition: failure to adapt the strategy in the context of external expectations
§ Integration of acquired businesses: failure to integrate acquired businesses as planned
Insurance
We have significant and appropriate insurance in place to minimise risk to our operational and investment programmes. This includes business interruption insurance.
Responsibility statement
The directors confirm that, to the best of their knowledge:
§ the condensed set of financial statements has been prepared in accordance with UK-adopted IAS 34 'Interim Financial Reporting',
§ the half-yearly results statement includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year), and
§ the half-yearly results statement includes a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).
By order of the Board,
Alexander Krane
Director