Harbour Energy plc

Good morning and welcome to Harbour Energy 2025 full year results. Today's presentation will be hosted by Linda Cook, CEO, Alexander Crane, CFO and Nigel Hearn, COO. After the presentation, we will take your questions. Linda, please go ahead.

Great. Thank you, Dan. Good morning, all, and welcome to our 2025 full-year results call. I'm Linda Cook, the CEO of Harbor Energy, and as Dan said, joining me for the presentation today are Alexander Cranor, CFO, and Nigel Hearn, the Chief Operating Officer. Before we turn to results, I do want to first just acknowledge recent geopolitical events which are driving extreme commodity price volatility and raising concerns over energy security. In some ways, similar to where we were just about the same time last year with Liberation Day upon us, governments and businesses around the world coming to grips with the impacts of a wide range of new tariffs and trade agreements. And of course, not that long ago, before that, we had the Russian invasion of Ukraine, a conflict that continues to this day. and before that, a global pandemic, all in the last five to six years. These are all reminders that we live and make decisions within an uncertain and at times volatile global environment. In response, it's important in a business like ours that we balance the short term with the long term and that we remain focused on the things we can control. Operational excellence, capital discipline, managing risk, and creating value for our shareholders. So turning to the agenda, I'm going to start by taking you through the highlights from what was a very good year for Harbor Energy in 2025 and some changes to our portfolio. Nigel will then cover operations, including how we're driving performance, Alexander will follow with the financial results, 2026 guidance, and a cash flow outlook for the near to midterm, all updated for our recent transactions, and also an outline of our new distribution policy. And then it's back to me to wrap up, leaving plenty of time for questions. So turning to my first slide, Harbor has grown from zero to more than 450,000 barrels per day over the last decade. driven by disciplined M&A and reinvesting in the acquired assets to add value. During that time, we repeatedly demonstrated our ability to identify and secure strategic transactions, and after completion, to safely and successfully integrate the acquired businesses and organizations. While past acquisitions, including Wintershaw Day in 2024, were focused on building scale and diversification, Our more recent ones have been targeted towards strengthening the portfolio, making it more resilient and enhancing longevity. Perhaps the best example is the acquisition of log exploration in the U.S. Gulf, completed ahead of schedule just a few weeks ago. The log assets, oil-weighted and all under operational control, helped to secure harbor's overall production at between 475,000 to 500,000 barrels per day to the end of the decade. And while overall production stays broadly stable, as you'll see later, replacing the declining U.K. volumes with growth in the U.S. with its attractive fiscal framework means that we'll see a significant increase over time in cash flow. So turning first to look back to 2025, as I said, another strong year for Harbor Energy, operationally, financially, and strategically. We achieved record production at 474,000 barrels per day. It was up more than 80% on the prior year. And with unit OPEX at $13 per barrel, our margins were strong. This, along with strong capital discipline and cost control, resulted in materially improved free cash flow and demonstrated our ability to navigate volatile commodity prices. We also had good momentum on our growth projects, including the transfer of operatorship of the major Zama development in Mexico from Pemex, the national oil company, to Harbor. and we continued to improve the overall quality of the portfolio through M&A. And let me just turn to that now. In December, we announced three transactions, each of which advances our strategy and strengthens our portfolio. First, we agreed the sale of our mature, higher-cost Indonesian producing assets and the Stald Tuna development project for $215 million, improving our portfolio quality and accelerating value. We also announced the $170 million acquisition of Waldorf, a small UK producer that brings around $900 million of value through tax losses. In addition, we unlocked $350 million of trapped cash upon completion, more than covering the purchase price. Combining the benefits of Waldorf with the great work by our team in Aberdeen to reduce costs and improve efficiency means we've materially enhanced the resilience and free cash flow outlook of our business in the UK. The proceeds from the Indonesia sale, along with the near-term cash flow, Uplift from Waldorf helped fund our entry into the U.S. Gulf through the acquisition of LOG. As we said in the announcement at the time of this transaction, we're really excited about the addition of a strategic position in the U.S. deep water. With LOG, we get a high-quality growth portfolio in one of the most prolific oil and gas-producing basins in the world, along with one of the best teams in the Gulf, and we're more than thrilled to have them join our harbor team. So each transaction was strategic in its own way, and collectively they have a material impact on the overall quality of our portfolio. So the next slide takes us to a snapshot of Harbor today, and I'll illustrate that point about the improved quality of the portfolio here. With the divestment of Vietnam in 2024, the announced sale of most of our Indonesia assets, and our entry into the U.S., our geographic footprint is shrinking, and the portfolio's center of gravity is shifting to the west. We've divested from mature positions in Southeast Asia with declining production and high unit costs, acquired five years ago through the premier oil transaction, and added strategic positions in Norway, Mexico, Argentina, and now the U.S., all with significant running room from a subsurface point of view, demonstrating, I think, that portfolio management is alive and well within harbor. Like in the past, if we can't see a route to scale or the assets can't compete for capital in our portfolio, they become divestment targets. And with the log acquisition, the bar to compete internally for capital has got that much higher. The outcome is a higher quality portfolio with higher margins, and as Alexander will show, increasing free cash flow over time. He'll also talk about the new distribution policy details, which aim to strike a balance, enabling a sustainable dividend and resilient balance sheet across commodity price cycles, while supporting investment in future production and enabling shareholders to benefit as that cash flow growth materializes, or if, like today, we have an unexpected spike in commodity prices. Turning to my last slide, I've mentioned our shrinking geographic footprint, meaning that today we're focused on five key countries, Norway, the U.K., Argentina, Mexico, and the U.S. As you can see, these account for 90% of our company, however you cut it, production, cash flow, reserves, resources. As Nigel will explain, each of these countries has its role to play in Harbor, and while together they support flat production over the coming few years, the portfolio evolution continues, and that's hinted at in the bars on this page. While the U.K. is responsible for a third of our production today, it represents only a bit over 10% of our combined reserves and resources. With Norway production expected to be flattish, The U.K. decline is replaced by investing in projects in the Americas, the U.S., Mexico, and Argentina. And this, over time, has positive implications for after-tax margins and cash flow. So now over to Nigel, and he'll take you through each of these countries in more detail, followed by Alexander.

Good morning, and thank you, Linda. Today our portfolio is more focused, competitive, and resilient. Across the business, we're aligned on delivering against four key priorities to drive total shareholder return. Operating safely and reliably, expanding our margins through cost and capital efficiency, converting our resources into reserves and into production, profitably and competitively, and growing our free cash flow sustainably. I will shortly take you through how each of our core business units is delivering against those priorities, and how the actions we've taken over the past year has put us on a path to stronger, longer, higher quality cash generation. First, and always first, is safety. Nothing matters more than protecting our people, our assets, and the communities in which we operate. We did see a slight increase in our recordable injury rate in 2025 as we expanded into new countries, but we continue to be a top performer in personal safety. In process safety, we delivered a reduction in Tier 1 and Tier 2 loss of containment events, but unfortunately recorded one Tier 1 event in Mexico. Safety is an area we will never be satisfied. We actively promote the learnings from our incidents, and is strengthening our focus on risk assessment, prevention and assurance activities. We've also delivered a step change reduction in our greenhouse gas emissions intensity, creating a more resilient portfolio. 2025 was a year of record production, delivering at the very top of our guidance. This reflects a full year's contribution from Wintershaw Aldea but also a strong year of execution across our expanded portfolio. We brought new wells online and completed new projects ahead of schedule in Norway, the UK and Argentina. Reliability across our asset base continued to be high at greater than 90%. And we made structural improvements in our cost base, with unit OPEX down 20%, driven by lower cost barrels from winter shaldea, Actions taken in the UK to reduce our costs by 10%, our exit from the higher cost Vietnam volumes, and we captured early synergies as we leveraged that increased scale. Together, these actions improved our earnings and cash margins, strengthening our competitiveness and resilience. Turning to our core business units. As the second largest Norwegian gas exporter to Europe, and Harbour's largest producer, our Norway business is central to our long-term cash flow. Our strong pipeline of infrastructure-led developments sustain profitable production into the next decade. At the end of 2025, we completed the Harbour operated Maria Phase 2 project, the first of six developments due online in the next 24 months. This project was delivered on time and within budget and is performing well. Our operator, Devalin North, is on track for completion mid-2026. All subsea infrastructure was successfully installed in 2025 and development drilling is underway. We're also maturing our next set of projects and we continue to explore. Earlier this week, we announced the Omega Solar Discovery. where we have a 24.5% share. The estimated size of the discovery is between 25 and 89 million barrels of oil equivalent of gross recoverable volumes, exceeding our pre-drill estimates and extending the Snorre field's lifetime beyond 2040. Our Norway business continues to exemplify our ability to profitably and efficiently turn resource to reserves to production. Despite continued fiscal headwinds, the UK delivered a strong performance in 2025. This was underpinned by high production efficiency and strong turnaround execution at our operated assets, structurally lowering our cost base. We shortened cycle times through near-field development and delivered best-in-class capital efficiency through the 2025 Wells program. Jocelyn South was brought on stream in March, just three months after discovery. Strong subsurface performance at Talbot and successful intervention campaigns led to the J area producing at rates not seen for over a decade. We are now bringing that same level of focus and discipline to our UK decommissioning programme. In addition, the Waldorf acquisition, as Linda said, once completed, will deliver meaningful financial synergies. As a result of these actions, we've materially strengthened the UK's cash flow outlook. Now turning to the Americas. Argentina provides both low-cost and long-term production, underpinned by our significant reserves and resource position. Today, the majority of our production comes from the conventional CMA1 licence. Phoenix is a great example of the tie-back opportunities that supports the stable, low-cost production from this asset. We hold over 700 million barrels of oil equivalent of 2C resources, primarily in the vast Vaca Muerta shale play. We are progressing the unconventional oil license at San Roque, with a 16-well program expected to start later this year. We are scaling up gas drilling at Ape, and our gas resource development will be optimized through our participation in the Southern Energy LNG project. Where export permits and incentives are secured, 80% of the first vessel uptake is now contracted, and the fabrication of the spur line and conversion of the second vessel is underway. First LNG production remains on track for the end of 2027. We continue to focus on drilling and completions efficiency, as we increase the scale and pace of our Vaca Muerta development. Argentina is a cornerstone for future, flexible, and capital-efficient reserve replacement. Our newest core business unit, the Gulf of America, adds scale and growth through to the end of the decade. It is a 100% operated, oil-weighted portfolio centered around three deepwater hubs at Hudat, Buckskin and Leon Castile. Production is expected to double by 2028, supported by low break-even drilling targets at our production hubs and ramp up at Leon Castile. Combined with the attractive fiscal terms, we are adding high margin barrels that fuel free cash flow growth through to the end of the decade. and with more than 350 million barrels of oil equivalent of 2P reserves and 2C resources, plus half a billion barrels of prospective resources, and success in the recent bid round, we have lots of running room in this prolific oil and gas basin. Our team have a proven track record of profitably and competitively converting resource to production, ranking best in class, among global peers when it comes to development cycle time. They are also responsible for one-third of all discoveries made in the Gulf since 2014. Over the next three years, we expect to allocate around $400 million a year with 10 to 15 wells planned. This includes development wells with internal rates of return in excess of 40% and low-risk infrastructure-led exploration wells with a short cycle time to production if successful. The Gulf of America business unit is transformative and raises the bar for capital competition within Harbor. Finally, Mexico represents one of our most material long-term growth opportunities. Through the Zama and Khan shallow water hubs, we are building a scaled advantage business with tieback potential. As newly appointed operator of Zama, we've submitted a simplified phase development plan designed to lower break evens, improve returns and lower risk. At Khan in 2025, resource was upgraded by 50% to 150 million barrels of oil equivalent gross. Together, Zama and Khan have the potential to deliver reserves equivalent to more than two years of group production. As operator of both hubs, we have the opportunity to capture synergies across design, drilling and operations. Both projects are expected to enter feed this year. Subject to partner alignment, securing FPSOs and regulatory approval, we're targeting both to be FID ready within an 18-month horizon and possibly one project as early as year-end. We also see additional upside through the alignment with our Gulf of America business union, using key capabilities and talent that we now have to help successfully deliver Zama and Calm. Mexico builds long life, high margin oil exposure with strong operating control. So putting this all together, what does it mean for our CapEx and production outlook? We expect to spend $2 to $2.3 billion per year from 2027, which we believe is the right level given our portfolio and opportunity set. With over 3 billion barrels of oil equivalent of 2p reserves and resources, we will prioritize the most competitive projects, continuing to high-grade the portfolio. This level of investment allows us to sustain production between 475 and 500,000 barrels of oil equivalent per day through the end of a decade. During this period, operated CapEx rises to 60%, giving us more control over cost, schedule and performance. And while overall production remains stable, we are replacing the declining higher cost UK production with higher margin growth in the US, and over time, Mexico. We have a strong history of reserves replacement, and we expect that to continue. For 2026, we anticipate at least 150% reserves replacement, supported by the log and Waldorf additions. Historically, we've droned reserves through M&A. Going forward, More will come organically from our large, diverse 2C resource base. The quality of our reserves also improves. More oil-weighted, more operated, and increasingly positioned in lower cost, lower tax basins. In summary, we are and will continue to have a laser focus on operating safely, reliably, and with discipline. Expanding margins, lowering break-evens, and improving capital efficiency, converting resources into production profitably and predictably, and building a portfolio with scale, longevity, and rising free cash flow. This is how we continue to strengthen Harbor. I will now hand over to Alexander for the financial review.