Oil and gas producer Harbour Energy (HBR.L) raised its annual free cash flow and production forecasts for the second time this year on Thursday after record first-half output and higher oil and gas prices, and pledged on Thursday to return at least $800 million to shareholders in 2026.
The company, one of the largest producers in the British section of the North Sea, said the returns programme would begin with a $250 million share buyback.
"We'll see where we end up with our full year of cash flow, and then decide how and when to make the decision on what the payout will actually be," CEO Linda Cook said in a call with reporters.
She added that the outcome would also depend on commodity prices, with Brent crude oil prices currently trading at about $80 per barrel during a volatile year.
Shares in the company rose about 7%.
Higher oil and European natural gas prices and record first-half production of more than 500,000 barrels per day have enabled an increase to Harbour's free cash flow outlook, Cook said in a statement.
RESHAPED PORTFOLIO
Harbour said it would also use the increased cash to reduce debt, which stood at about $5.17 billion as of June end, up from $4.31 billion at the end of last year.
The company has been reshaping its portfolio following the Wintershall Dea acquisition, completing its entry into the U.S. through the purchase of LLOG Exploration while selling non-core assets and expanding beyond the UK as high windfall taxes have made investment less attractive.
Early signals are that new UK Prime Minister Andy Burnham's government wants to be more pragmatic about the country's oil and gas policy, Cook said to reporters.
Harbour raised its free cash flow outlook to $1.8 billion from $1.4 billion, partly helped by a positive commodity price outlook for the second half as a result of the Iran war.
The company reported first-half adjusted earnings before interest, taxes, depreciation, amortisation and exploration expenses of $4.47 billion, missing estimates of $4.6 billion.
Harbour now expects 2026 production of 490,000-500,000 barrels of oil equivalent per day (boepd), compared with company-compiled consensus estimates of 493,000 boepd.
The company's priorities are on integrating the assets it has recently acquired, consolidating its portfolio, paying down debt and benefiting shareholders through cash distributions.
Harbour has already achieved a goal set earlier this year of reducing net debt by $1 billion by 2028, Cook said, and the company has not yet set a new goal.
