Harbour Energy hails 'excellent' 2025 and sets out new payout policy

Harbour Energy PLC on Thursday hailed a year of ‘significant progress’ as it set out a new payout policy which could see the oil and gas producer return up to three quarters of its annual free cash flow to shareholders.

Shares in the firm rose 3.8% to 270.60 pence each in London on Thursday afternoon.

Harbour, which has operations in the UK, Norway, Argentina, Germany, Egypt and the Gulf of Mexico, achieved record output of 474,000 barrels of oil equivalent per day in 2025, up 84%.

Pretax profit surged to $2.80 billion from $1.22 billion. Total revenue jumped by 65% to $10.26 billion from $6.23 billion. Harbour did see a wider post-tax loss, however, stretching to $182 million from $93 million. Its tax expense more than doubled to $2.98 billion from $1.31 billion.

Harbour said this was ‘primarily driven by higher pretax profits resulting from the additional earnings contributed by the acquisition and the extension of the UK energy profits levy’.

UK Chancellor Rachel Reeves on Wednesday reaffirmed her commitment to end the windfall tax on North Sea oil and gas, PA reported, as she met bosses in the sector. The levy is set at 38%.

Harbour Chief Executive Officer Linda Cook said: ‘2025 was a year of significant progress for Harbour. We delivered excellent operational performance while maintaining capital discipline and integrating new assets. This drove record production and higher free cash flow against a backdrop of lower commodity prices. In addition, we improved our cost structure, built momentum at our growth projects in Mexico and Argentina, and announced three significant transactions. Together these actions position Harbour’s portfolio to deliver higher margin production over the coming years, leading to material growth in free cash flow.

‘2026 is off to a strong start. Production over the first two months of the year averaged 509,000 barrels per day.’

Harbour expects annual output between 475,000 and 500,000 boepd, so up from 2025.

It achieved free cash flow of $1.07 billion in 2025, swinging from an outflow of $118 million in 2024.

The firm declared a final dividend of 8.05 cents per share, down 39% from 13.19 cents a year earlier. It made for a total dividend of 21.24p, down 19% from 26.19p.

Harbour said it has adopted a new distribution policy, linking returns ‘directly to free cash flow’.

‘The new policy includes a base dividend and supports deleveraging alongside disciplined investment in attractive organic growth opportunities in the near term. This will underpin future production and free cash flow growth, driving enhanced shareholder returns over time,’ the firm said.

Under the new framework, it will target returning between 45% and 75% of free cash flow each year, including an initial base dividend of 16.10 cents per share. Since 2022, it has returned 40% of cash flow to shareholders on average.

With a leverage ratio above 1.0 times, Harbour expects to pay out towards the lower end of the range, putting the onus on debt reduction. As the leverage ratio falls below that level, the payout ratio is expected to move towards the upper end of the range.

The final dividend for 2025 was in line with the new policy and brings its total distributions for 2025 to $478 million, around 45% if free cash flow.

Harbour’s leverage ratio, its net debt divided by its earnings before interest, tax, depreciation, amortisation and exploration cost write-offs, improved to 0.6 times in 2025 from 1.1 in 2024.

Harbour’s 2025 Ebitdax shot up 77% to $7.12 billion. Its net debt was down slightly to $4.31 billion from $4.42 billion.

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