The North Sea’s largest independent operator said it is paying more to the UK tax man than it earns as it revealed its latest accounts for 2024.
Harbour Energy (LON: HBR) said its annual report revealed pre-tax profits had doubled to $1.2 billion (£920 million) although this was $800,000 lower due to “non-cash accounting charges” driven by “adverse changes to the UK fiscal regime”.
After paying tax, the firm said it actually made a loss of $93 million, compared to a $45m post-tax profit the year before. This was due to a “108% effective tax rate”.
The firm has since changed tack. Last year it acquired German rival Wintershall DEA in a deal worth $11.2bn, mostly in an effort to pivot away from its reliance on the UK North Sea.
The deal has proved positive as revenues rose 65% to $6.2billion and oil and gas production rose 40% to 258 kboepd.
Safety
However the widening of its portfolio to across the world has brought with it safety issues.
The firm admitted it hosted its “first-ever tier 1 process safety event” in Indonesia – which describes the most serious consequences due to an accidental spill of hazardous materials. The company added it had three slightly less serious tier 2 events, highlighting that its total recordable injury rate (TRIR) has increased to 1 per million hours worked compared to 0.7 in 2023. The firm said this reflected higher injury rates “from the newly acquired assets for the last four months of 2024”.
Following the acquisition of Wintershall, the firm has significant assets in Norway and the UK, 30% of its assets in conventional offshore growth projects in Mexico and Indonesia, with the remaining 30% in the onshore Vaca Muerta shale play in Argentina.
Ahead of its capital markets event on Thursday, it said expects to see an “ongoing role for acquisitions in its strategy as well as potential for investment in CO2 storage”.
Harbour won a licence to store carbon in the Southern North Sea to reuse the depleted Rotliegend, Viking and Victor gas fields as early as 2021.
The firm said it had submitted a development consent order for a new CO2 pipeline in December on its Viking CCS scheme off the Humber. It is a joint venture with BP which recently announced plan to slash investment in low carbon areas.
Harbour said it expects “clarity” on support for the scheme following the government’s critical spending review. This is due to be revealed by UK Chancellor Rachel Reeves in a spring statement near the end of March after the Office for Budget Responsibility (OBR) issues an updated economic forecast.
Chief executive Linda Cook said: “2024 was a transformational year with the completion of the Wintershall Dea transaction, our fourth significant transaction since 2017. As a result, we achieved a step change in the scale, resilience and longevity of our business underpinning the potential for material free cash flow generation well into the next decade. At the same time, we delivered another year of solid operational and financial performance.
“Looking to 2025, we have had a strong start to the year. We continue to prioritise safe and efficient operations, mature our significant 2C resource base and maintain disciplined capital allocation. We remain excited about our future and look forward to realising the potential of our company for all our stakeholders.”
More to follow.
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