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Annual Report
& Accounts 2024
Harbour Energy plc
FIND OUT MORE ONLINE
HARBOURENERGY.COM
Our purpose
is to play a significant role in meeting
the world’s energy needs through the safe, efficient
and responsible production of hydrocarbons, while
creating value for our stakeholders.
2024 has been a transformational year
with the completion of the Wintershall Dea
transaction, which added high quality assets,
diversified our portfolio and strengthened
our financial position.
Our strategy has enabled us to grow rapidly
since we were founded in 2014 to become
one of the largest and most geographically
diverse independent oil and gas companies
in the world today.
LINDA Z. COOK
CHIEF EXECUTIVE OFFICER
A transformational year
for Harbour Energy
Integrating our reporting
In 2023, we integrated our financial
and sustainability reports into one
comprehensive report to enhance
transparency and provide our
stakeholders with a holistic view
of our company’s performance.
In 2024, we conducted a double
materiality assessment informed
by the approach in the European
Sustainability Reporting Standards,
to help us prepare for the upcoming
Corporate Sustainability Reporting
Directive (CSRD), effective for
Harbour in 2025.
Reporting basis
All data is provided on a reported
basis with the Wintershall Dea
asset portfolio contributing from
completion of the transaction
(3 September 2024) unless
otherwise stated.
1–69
STRATEGIC REPORT
2
2024 snapshot
4
Our global portfolio
6
Chair’s statement
7
Chief Executive Officer’s statement
10
Market overview
12
Our strategy & business model
14
Engaging with our stakeholders
18
Our culture & values
20
Key performance indicators
22
Operational review
32
Financial review
38
Sustainability review
60
Risk management
64
Principal risks
197–208
ADDITIONAL INFORMATION
197
Independent assurance
statement
199
UK Government payment
reporting
202
Group reserves and resources
203
Worldwide licence interests
205
Glossary
208
Shareholder information
118–196
FINANCIAL STATEMENTS
118
Independent auditor’s report
130
Consolidated income statement
131
Consolidated statement
of comprehensive income
132
Consolidated balance sheet
133
Consolidated statement
of changes in equity
134
Consolidated statement
of cash flows
135
Notes to the consolidated
financial statements
192
Company balance sheet
193
Company statement
of changes in equity
194
Notes to the company
financial statements
70–117
GOVERNANCE
70
Governance at a glance
72
Chair’s introduction
74
Board of directors
78
Nomination Committee report
82
Audit and Risk Committee report
86
HSES Committee report
88
Directors’ remuneration report
114
Directors’ report
117
Statement of directors’
responsibilities
Successful completion of the
Wintershall Dea transaction
CHIEF EXECUTIVE OFFICER’S STATEMENT
PAGE 7
Underpinning future
production and cash flow
OPERATIONAL REVIEW
PAGE 22
A commitment to investment
grade credit ratings
FINANCIAL REVIEW
PAGE 32
WELL POSITIONED FOR THE FUTURE
SAFE & RESPONSIBLE
Ensure safe, reliable and
responsible operations
Creating value for
our stakeholders
SUSTAINABILITY REVIEW
PAGE 38
SCALE & DIVERSITY
Maintain a high quality portfolio
of reserves and resources
HIGH QUALITY & RESILIENT
Leverage our full cycle capability
to strengthen our portfolio
FINANCIAL DISCIPLINE
Ensure financial strength through
the commodity price cycle
1
Harbour Energy plc
Annual Report & Accounts 2024
2024 SNAPSHOT
A year of continued delivery
1
We report our safety and the environment metrics on a gross operated basis.
2
Total recordable injury rate, measured on a per million hours worked basis.
3
Comprising one Tier 1 event and three Tier 2 events.
Transformational acquisition
Completed the Wintershall Dea transaction in September 2024
258
kboepd
Production (2023: 186kboepd)
$16.5
/boe
Operating costs (2023: $16.4/boe)
3.2
bnboe
2P reserves + 2C resources at year end 2024
(2023 year end: 880mmboe)
OPERATIONAL REVIEW
READ MORE ON PAGE 22
Operational
Safety and the environment
1
1.0
/m hours
TRIR
2
(2023: 0.7/m hours)
4
Tier 1 & 2
Process safety events (2023: Zero 1 & 2)
3
26
kgCO
2
e/boe
GHG intensity (2023: 23kgCO
2
e/boe)
SUSTAINABILITY REVIEW
READ MORE ON PAGE 38
2
Harbour Energy plc
Annual Report & Accounts 2024
Investment grade credit rating
Achieved from key credit rating agencies
$4.0
bn
EBITDAX
4
(2023: $2.7bn)
$0.1
bn
Free cash flow
5
before one-off acquisition fees (2023: $1.0bn)
$455
m
Annual dividend policy commitment (2023: $200m)
Financial
FINANCIAL REVIEW
READ MORE ON PAGE 32
Working to address global challenges
We support the UN Sustainable Development
Goals, which aim to overcome global
challenges such as poverty, inequality and
climate change by 2030. We focus on the
goals where we can make the most impact.
Transparent reporting
We report using Global Reporting Initiative
standards and SASB indicators, and are preparing
for the upcoming CSRD. CDP reaffirmed our rating
of ‘B’ for our 2024 environmental performance
and disclosure.
Making a positive impact
We have set an aspiration to be net zero by 2050
for our gross operated Scope 1 and 2 CO
2
e
emissions, with an interim target of a 50 per cent
reduction versus a 2018 baseline by 2030.
4
EBITDAX is a non-IFRS measure calculated by taking earnings before tax, interest, depreciation and amortisation,
impairments, remeasurements, onerous contracts and exploration expenditure. This is a useful indicator of underlying
business performance.
5
Free cash flow is operating cash flow less cash flow from investing activities less interest and lease payments.
3
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
MEXICO
ARGENTINA
European gas
Oil
Other gas
NGLs
44%
35%
14%
7%
Harbour’s global footprint
Today, Harbour Energy is active in
11 countries. This includes significant
production in well-established oil and gas
producing regions in Europe, Southeast
Asia, Latin America and North Africa
and a high quality portfolio of 2P reserves
and 2C resources.
In addition, Harbour has a leading CO
2
storage position in Europe, where we
are seeking to deploy our skills and
utilise existing infrastructure to build
a competitive business with long-term
cash flow potential.
21
kboepd
2024 production
c.1,025mmboe
2024 2P reserves
+ 2C resources
4
kboepd
2024 production
c.450mmboe
2024 2P reserves + 2C resources
2024 production
OPERATIONAL REVIEW
READ MORE ON PAGE 22
OUR GLOBAL PORTFOLIO
A geographically diverse
large-scale oil and gas producer
READ MORE
PAGE 28
READ MORE
PAGE 29
4
Harbour Energy plc
Annual Report & Accounts 2024
NORTH AFRICA
UK
GERMANY
NORWAY
2
3
1
SOUTHEAST ASIA
10
kboepd
2024 production
c.170mmboe
2024 2P reserves
+ 2C resources
52
kboepd
2024 production
c.765mmboe
2024 2P reserves
+ 2C resources
11
kboepd
2024 production
c.225mmboe
2024 2P reserves
+ 2C resources
12
kboepd
2024 production
c.80mmboe
2024 2P reserves
+ 2C resources
659
mt
Net CO
2
storage resources
A LEADING EUROPEAN CCS PORTFOLIO
1. UK
2. DENMARK
3. NORWAY
149
kboepd
2024 production
c.435mmboe
2024 2P reserves
+ 2C resources
READ MORE
PAGE 30
READ MORE
PAGE 30
READ MORE
PAGE 26
READ MORE
PAGE 27
READ MORE
PAGE 31
READ MORE
PAGE 28
5
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CHAIR’S STATEMENT
Against this complex backdrop, it is
important that we have conviction in
Harbour’s purpose and strategy for the
future. Our purpose – to play a significant
role in meeting the world’s energy needs
through the safe, efficient and responsible
production of hydrocarbons, while creating
value for our stakeholders – has served
us well. We believe it will continue to do so.
The transition to a lower carbon future, which
we support, remains highly complex. It will
take decades to accomplish. And it will require
more investment and the continued use of
hydrocarbons for much longer than some
people expect, including in net zero scenarios.
Oil and gas producers have a vital role to
play in this transition. First, we will need
to continue producing oil and gas, at a
lower carbon intensity, to meet growing
demand for energy – energy that is both
reliable and affordable. This will be all the
more important as a result of persistent
underinvestment in the sector over the last
several years which risks future shortfalls in
supply. Second, we will need to develop CO
2
sequestration technologies at scale. Carbon
capture and storage (CCS) forms a part of
credible net zero scenarios, and Harbour is
well placed to deploy its expertise and utilise
existing infrastructure to be a leader in this
area. This will be vital to enabling a just
and affordable transition to a lower carbon
economy. As a leading, diversified global
producer with a substantial carbon storage
position in Europe, Harbour remains well
positioned for the future.
Looking ahead, 2025 will be another
important year for us. We will continue to
aim for safety and operational excellence,
to complete an efficient integration of the
Wintershall Dea portfolio, and to further
execute our strategy.
I am extremely proud of what Harbour Energy
has achieved in the last 10 years, and
we could not have done it without our
shareholders. I would like to assure you that
we remain laser-focused on delivering a total
shareholder return that rewards you for your
continued support for Harbour Energy.
R. Blair Thomas
Chair
2024 was a very significant year for
our company, with the completion
of the Wintershall Dea transaction.
When we established Harbour Energy a
decade ago, we had a clear vision about
the future of our industry and a strategy
underpinned by M&A-led growth. This
ambitious transaction is further proof that
we can be entrepreneurial, nimble and
commercial, and fulfils many of the criteria
that are important to us.
It delivers a step-change in Harbour’s scale
in an industry in which scale is increasingly
important. It delivers a step-change in our
geographic diversification, with production
and growth opportunities in multiple
established basins. It delivers a step-change
in the quality of our portfolio, improving our
margins, increasing our reserves life and
expanding our resource base significantly.
And it delivers a step-change in our access
to capital through our investment grade
credit rating. These are all competitive
advantages which propel us into a new peer
group of large, global independent oil and
gas companies – of which there are fewer
and fewer as another round of consolidation
sweeps across our sector.
These factors strengthen our business
in a world defined by rapid change and
macroeconomic and geopolitical volatility.
In the global economy, while inflation has
eased, interest rates remain high by recent
standards, and demand from China remains
below pre-Covid levels, weighing on oil
markets. Increased instability in the Middle
East, in addition to the Ukraine conflict,
continue to contribute to volatile oil and gas
prices. Meanwhile, in an unprecedented year
of elections, voters chose new governments
in several countries that impact our business.
Another challenge for our industry is, of
course, the energy transition. The combative
tone of the debate about climate change
means that society at large has become less
accepting of the oil and gas industry. This has
impacted policymaker, investor and lender
sentiment. In some jurisdictions – the UK
being a good example – an unwelcoming fiscal
and regulatory environment is deterring
investment in future production. Meanwhile,
lender appetite for our industry has fallen and
investors expect higher returns on their capital.
Well positioned
for future success
The Wintershall Dea transaction delivered a
step-change in Harbour’s scale, geographic
diversification, portfolio quality and access to
capital, and positions us well for future success.
R. BLAIR THOMAS
CHAIR
6
Harbour Energy plc
Annual Report & Accounts 2024
CHIEF EXECUTIVE OFFICER’S STATEMENT
A transformational year
2024 was a transformational
year for Harbour Energy with the
completion of the Wintershall Dea
transaction. As a result, we became
one of the world’s largest and most
geographically diverse independent
oil and gas companies.
At the same time, we achieved another year
of solid operational and financial performance
as we continue to deliver on the purpose and
strategy we set out a decade ago.
Safety is and always will be our number one
priority. Critical for us therefore was the safe
transfer of the Wintershall Dea portfolio to
Harbour ownership, which we achieved in
September. However, after years of steadily
improving safety performance, we saw an
increase in our total recordable injury rate and
we experienced our first Tier 1 process safety
event and three Tier 2 process safety events
in 2024. These incidents have been rigorously
investigated and actions put in place to
strengthen our process safety defences.
This performance is a reminder of the need
to keep safety front-and-centre as we work
to complete the integration and embed our
strong safety culture and standards across
our newly enlarged portfolio.
As a result of the Wintershall Dea
transaction, we materially increased and
diversified our production, achieving rates
of c.500 kboepd in the fourth quarter with
significant contributions from Norway, the
UK, Argentina and Germany. Norway, with
its low unit operating costs, top quartile
GHG emissions intensity and stable and
supportive fiscal regime, is now the largest
producer in our portfolio. Globally, production
was supported by new wells and projects
brought on-stream in the second half of the
year resulting from continued investment in
high return, short cycle opportunities close
to existing infrastructure. We also delivered
significant exploration and appraisal success
in the year with positive drilling results in
Norway, the UK, Indonesia and Mexico.
We remain very focused on maturing our
significantly expanded and diverse 2C resource
base of 1.9 billion boe to help sustain
production and cash flow in the future.
These resources include near-infrastructure
opportunities, conventional, offshore
projects in Mexico, Norway, Argentina and
Indonesia, and scalable, unconventional
opportunities in the Vaca Muerta onshore
shale play in Argentina.
2014
Founded
by EIG
(private equity)
2017
$3.0bn
Shell
transaction
2019
$2.7bn
ConocoPhillips
transaction
2021
$2.7bn
Premier Oil
merger
c.475
kboepd
1
175
kboepd
137
kboepd
We are extremely proud to have completed the
transformational Wintershall Dea transaction
during 2024. Our enlarged business has a high
quality, resilient portfolio which together with
our dedicated team, strong financial position
and disciplined capital allocation, means we’re
well positioned for the future.
LINDA Z. COOK
CHIEF EXECUTIVE OFFICER
2024
$11.2bn
Wintershall Dea
transaction
17
kboepd
Growth through large scale M&A
1
Pro forma; reflects 12 months’ contribution from legacy Harbour assets and Wintershall Dea asset portfolio.
7
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
CHIEF EXECUTIVE OFFICER’S STATEMENT
CONTINUED
Our Leadership Team
We restructured our Leadership Team to support and strengthen executive
oversight of our expanded business, creating a Chief Operating Officer role to
oversee our seven Business Units, an EVP Technical Services and an EVP CCS.
FIND OUT MORE ONLINE
HARBOURENERGY.COM/ABOUT-US/OUR-SENIOR-TEAM
Howard Landes
General Counsel
Key responsibilities
Managing Harbour’s legal,
compliance and governance
matters globally, underpinned
by our commitment to ethical
business conduct.
Alan Bruce
EVP Technical Services
Key responsibilities
Leading our global technical functions
including HSES, subsurface, portfolio
and reserves, capital projects,
engineering, operations and wells
to support delivery of technical
and operational excellence.
Gill Riggs
Chief Human Resources Officer
Key responsibilities
Supporting the Harbour
organisation through talent
acquisition, career development
and succession planning,
compensation and benefits,
DE&I, and employee engagement.
Graeme Davies
EVP CCS
Key responsibilities
Accountability for our CCS
strategy, portfolio development,
maturing projects towards
investment decisions, and
post-FID project delivery.
NEW MEMBER
NEW MEMBER
Alexander Krane
Chief Financial Officer
Key responsibilities
Directing company-wide controls,
capital allocation, financing
activities, risk management,
business reporting and planning.
Andrea Pinarel
EVP Strategy and Business Development
Key responsibilities
Leading strategic reviews, oversight
and support for commercial
activities, assessing and executing
new business development
opportunities.
Nigel Hearne
Chief Operating Officer
Key responsibilities
Accountable for safe and
responsible business delivery
across Harbour’s seven Business
Units in Norway, UK, Germany,
Mexico, Argentina, Southeast Asia
and North Africa.
Philip Whittaker
EVP Business Services
Key responsibilities
Delivering world-class business
and information systems and
corporate provision of supply chain,
communications, real estate and
integration capabilities.
NEW MEMBER
NEW MEMBER
8
Harbour Energy plc
Annual Report & Accounts 2024
With the addition of the Wintershall Dea
portfolio, we now have a much wider organic
investment opportunity set to support future
production. However, acquisitions will remain
a core dimension of our strategy. We will
continue to leverage our M&A expertise to
strengthen our portfolio, prioritising high
quality assets which lengthen our reserve life,
ensure a balance of oil and gas, and increase
our operational control, mindful always of
balancing this with protecting our balance
sheet and distributions for our shareholders.
The acquisition of the Wintershall Dea assets
is expected to deliver a step up in the scale
and sustainability of our free cash flow,
underpinned by our improved reserves life
and expanded resource base. This, together
with our investment grade credit ratings,
enabled us to increase our annual dividend
payment to $455 million, signalling the
Board’s confidence in the increased scale
and longevity of our free cash flow generation.
We will continue to maintain a strong
balance sheet, providing us with optionality
through the commodity price cycle. We will
allocate our capital to our most attractive
projects, thereby ensuring a robust and
resilient portfolio and underpinning
competitive dividend payments with
the potential for additional shareholder
returns via share buybacks.
Looking ahead, we remain focused on
continuing to deliver our strategy of building
a global, diversified oil and gas company.
In this respect, our priorities for 2025
are simple: deliver strong safety and
operational performance, mature our 2C
resource base, complete the integration
of the Wintershall Dea portfolio, and
maintain disciplined capital allocation.
Harbour Energy has come a long way since
we were founded in 2014, and I am extremely
proud of what has been accomplished since
producing our first barrel just seven years ago.
I would like to thank everyone involved for
their tremendous efforts in completing the
Wintershall Dea transaction and for continuing
to ensure we delivered operationally and
financially throughout 2024. With today’s
portfolio, and our experienced and dedicated
team, we’re well positioned and excited for
the future.
Linda Z. Cook
Chief Executive Officer
Notably, in Q4, we signed a participation
agreement to acquire a 15 per cent interest
in Southern Energy SA which is looking
to develop an FLNG export project in the
country. The acquisition completed in
January 2025. This marks an important
step towards unlocking Harbour’s significant
2C resource in Vaca Muerta, Argentina.
The Wintershall Dea transaction also added
to our CCS portfolio, with new licences in
Denmark, Norway and the UK, where we
already have our flagship Viking project,
one of the largest potential CCS projects
in the world. An important milestone was
reached in December, with the approval of
Greensand Future in Denmark, Harbour’s
first CCS project to have reached a final
investment decision.
As a result of the transaction, we had to
design and staff an organisation capable of
managing a much larger business. Key new
appointments included a Chief Operating
Officer (COO) to oversee operational delivery
in our seven Business Units, an EVP for
technical services to support and provide
assurance for our technical organisation
globally, and an EVP for CCS to execute our
strategy to create value from our enlarged
CCS portfolio. Below the leadership level, we
also strengthened our corporate functions,
drawing from a talent pool comprising
internal candidates, Wintershall Dea
employees and external hires.
9
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
MARKET OVERVIEW
2024 saw continued geopolitical tensions,
macroeconomic uncertainty and an elevated
level of M&A activity in the oil and gas sector
Markets and geopolitics
US equity markets once again materially
outperformed those in the UK and Europe,
largely driven by the dominance of the
technology sector and expectations
related to Donald Trump’s election, with
the S&P 500 up 25 per cent in the year.
Meanwhile, the uncertain impact of
proposed trade tariffs and broader
implications of the Trump administration
cast a shadow over the year-end
performance for both UK and European
stocks, which closed the year with
single-digit gains as lower interest rate
expectations were offset by persistent
concerns over a potential recession.
Geopolitical tensions, including ongoing
conflict in the Middle East and the war
between Russia and Ukraine, continued.
In addition, election activity in over 50
countries added to the level of uncertainty
and change, including in several countries
where Harbour is active.
In the UK, the newly elected Labour
Government increased and extended
the Energy Profits Levy (EPL) on oil and
gas producers and removed the EPL
investment allowance uplift, effective
in November, while stating an intention
to work with industry to design a more
stable and sustainable fiscal regime for
implementation at the end of the decade.
In addition, the Finch Ruling, which
required the consideration of Scope 3
GHG emissions in the approval process
for new field developments, adds to the
negative investment climate for oil and
gas producers in the country.
On the other hand, the government signalled
its commitment to support CCS with over £21
billion of funding for two industry-sponsored
projects but delayed any decision regarding
the next two projects in line for approval –
including Harbour’s Viking project – until
at least spring 2025.
In Argentina, President Javier Milei, in his first
year of office, introduced new legislation (RIGI)
which incentivises large infrastructure projects
through tax breaks and dollarisation of
revenues. This is supportive of the significant
investments required to develop the country’s
world class Vaca Muerta shale resources.
In Mexico, President Claudia Sheinbaum
became the country’s first female president.
In November, she announced the country’s
National Energy Plan which included the
goal to maintain Mexico’s oil production at
1.8 million barrels per day by focusing on
strategic projects, specifically referring to the
development of Harbour’s Zama discovery.
Governments in Norway, Indonesia and
our North African countries of Egypt, Algeria
and Libya remain highly supportive of
international oil and gas companies as they
seek to attract additional investment. In
Egypt, there is a focus on improving security
of supply and the newly appointed Minister
of Petroleum has introduced initiatives to
increase domestic production. In Algeria,
the country launched its first new licensing
round since 2014.
OUR RESPONSE & OPPORTUNITY
Anticipating the changes to the oil and gas
fiscal terms in the UK, we accelerated capital
investment in the country into early 2024
and built flexibility into our UK supply chain.
Following the Wintershall Dea transaction,
the UK is a much smaller part of our portfolio
and investment opportunities in the country
will now have to compete with those across
our larger portfolio. At our Viking CCS project,
we have adapted the schedule and slowed
the pace of investment as we await further
progress from the UK Government.
In Norway, Harbour is now the sixth largest
producer, and the country is our largest
source of production. Our entry as a producer
into the country following the Wintershall Dea
transaction has been welcomed by relevant
Norwegian authorities and stakeholders and
we have been pleased to announce the
successful appraisal of two recent discoveries
since completion of the transaction.
In Argentina, we are working with partners to
explore opportunities to accelerate investment
in new developments, both offshore and in the
Vaca Muerta. Harbour also acquired a 15 per
cent interest in Southern Energy in January
2025, which is looking to develop a small-scale
Floating Liquefied Natural Gas export project,
enabling Harbour to access global Liquefied
Natural Gas markets and international gas
prices. Southern Energy has submitted an
application for the project to qualify under RIGI.
In Mexico, the Wintershall Dea transaction
resulted in increasing our stake in the
strategically important Zama project from
12 per cent to 32 per cent. With the full support
of the new government, the project entered
the final engineering and design phase.
In Indonesia, we had two additional gas
discoveries in the Andaman Sea. Planning
for a potential development is now underway
for these strategically located gas resources.
Finally, in Algeria, we initiated technical studies
in preparation for participation in the licensing
round, scheduled for April 2025.
10
Harbour Energy plc
Annual Report & Accounts 2024
OPERATIONAL REVIEW
READ MORE ON PAGE 22
Commodity prices
Brent oil price
In 2024, oil prices have remained volatile
due to a combination of geopolitical
tensions, supply and demand dynamics,
and economic factors. Amidst these
uncertainties, 2024 Brent crude prices
averaged $81/bbl, fluctuating within
a range of $71/bbl to $93/bbl.
Global oil demand continues to grow,
but at a slower pace. This is in part due
to weaker economic conditions including
softer Chinese growth and is reflected in
the OPEC+ decision in November to delay
the unwinding of production cuts. This
meant global oil inventory levels remained
relatively low in historical terms, providing
some price support, exacerbated by
further escalation in Middle East conflicts.
Brent ended the year at $75/bbl, $1/bbl
below its level at the start of 2024.
UK and European natural gas prices
UK and European natural gas prices
remained higher than average during 2024
with UK NBP and European TTF averaging
83 pence/therm (c.$11/mscf) and €34/
MWh (c.$10/mscf), respectively. Events
such as disruptions in Norwegian flows
or US LNG supply impacts from hurricanes
have exacerbated volatility.
Prices were generally lower during the first
half of the year due to higher storage levels
and milder weather reducing demand. In the
second half of the year, prices rose driven by
Norwegian pipeline outages and anticipation
of a colder-than-expected winter. Both the
UK and European indices reached yearly
highs in November amidst further escalation
of the Russia-Ukraine war and the
uncertainty about Russian exports through
Ukraine. UK NBP closed the year at 118
pence/therm or $15/mscf and TTF at
€48/MWh or $15/mscf.
OUR RESPONSE & OPPORTUNITY
The Wintershall Dea transaction significantly
increased our operational leverage to commodity
prices by almost tripling our production.
The acquisition also increased our exposure
to European TTF gas prices which closed the
year at €48/MWh or $15/mscf. Following
completion of the acquisition, our production
is broadly split c.40 per cent oil, 40 per cent
European natural gas and 20 per cent other
gas which is largely sold under fixed price or
formula-linked contracts. Exposure to different
markets and prices, coupled with our active
hedging strategy, allows us to manage
commodity price risk and invest through
the price cycles.
In 2024, we realised post-hedging oil and
European gas prices of $82/bbl and $11/mscf,
reflecting that 24 per cent of our total pre-tax
liquids production and 47 per cent of our total
pre-tax European gas production was hedged.
The price received for our other gas production
averaged $4/mscf. For 2025, our hedging
increases with c.26 per cent of our estimated
liquids production hedged at an average price
of $77/bbl and c.48 per cent of our estimated
European natural gas production hedged at an
average price of $14/mscf.
Despite the uncertain backdrop, M&A
activity in the oil and gas sector remained
elevated in 2024, in particular with
consolidation amongst US companies
and in the UK North Sea.
In the US, large companies continued to
secure high quality unconventional shale
reserves to help maintain production levels
and margins as the shale play matures.
Notably, Diamondback announced the
acquisition of Endeavour, ExxonMobil
completed the Pioneer acquisition, and
ConocoPhillips completed the acquisition
of Marathon Oil.
OUR RESPONSE & OPPORTUNITY
In September 2024, we completed the
transformational acquisition of the
Wintershall Dea asset portfolio, marking
our fourth major acquisition since we
were founded in 2014. This acquisition
transformed the scale, geographic diversity
and longevity of our portfolio, and delivered
a stronger company financially as our
credit rating improved to investment grade.
M&A remains a core part of our strategy and
the opportunity set remains rich. This includes
the opportunities that may arise as larger
companies integrate recent acquisitions and
look to consolidate geographic footprints,
as smaller companies look for scale and
relevance, and as private companies look
for a path to liquidity.
With production over 450 kboepd on a
pro forma basis and positions in 11 countries
we arguably have sufficient scale and
geographical diversity. Going forward, our focus
will be to continue to add high quality assets,
lengthen our reserve life, maintain a balance
of both oil and gas, and increase operational
control all while staying true to our commitment
to a conservative approach to the balance
sheet and to competitive shareholder returns.
The year also saw two significant
transactions announced in the UK North
Sea as companies look to achieve
economies of scale, drive efficiencies and
preserve margins given the increasingly
punitive fiscal regime and maturity of the
basin. Namely, Eni and Ithaca Energy
agreed to combine their UK portfolios,
and Shell and Equinor announced the
merger of their UK oil and gas assets.
c.30
%
Of total production hedged in 2024
Mergers and acquisitions
$225
bn
Disclosed value of oil and gas
M&A announced in 2024
1
The UK Emissions Trading Scheme
(ETS) carbon allowance price averaged
£38/t in 2024, down from £53/t
in 2023. This was mainly driven by
an increasing surplus of allowances,
including the auction of previously
unallocated allowances, and lower
industrial emissions.
The EU ETS carbon allowance price
averaged €65/t in 2024, compared
to €83/t in 2023. Relative to the cost
of allowances in the UK, the EU ETS
is higher, in part reflecting stricter
emissions reduction targets in the EU.
OUR RESPONSE & OPPORTUNITY
Harbour purchases UK and EU ETS carbon
allowances, as required, over and above
its annual government issued allocations
to meet the compliance requirements of
the schemes. We continue to work to reduce
our emissions and look to manage our
exposure to both UK ETS and EU ETS carbon
allowance prices through hedging and
participation in auctions.
UK and EU ETS prices
1 Source: Dealogic.
11
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
FINANCIAL
DISCIPLINE
Ensure financial strength
through the commodity
price cycle
PROGRESS IN 2024
Investment grade credit ratings
achieved from the three main
credit rating agencies
Successful issuance of €1.6
billion senior notes comprising
€0.7 billion with 3.8 per
cent coupon due 2029 and
€0.9 billion with 4.4 per cent
coupon due 2032
Increase in annual dividend
commitment to $455 million
signalling our confidence in the
increased scale and longevity
of our free cash flow generation
PRIORITIES FOR 2025
Continued execution of our
hedging strategy to ensure
predictable and resilient cash
flow through the commodity
price cycle
Protect investment grade
credit ratings, including
by maturing investment
opportunities which improve
reserve life and reducing
absolute net debt levels
Proactively manage our
debt maturity profile
Deliver on our commitment
to shareholder distributions
SAFE &
RESPONSIBLE
Ensure safe, reliable
and responsible
operations
PROGRESS IN 2024
Safe and efficient operations,
including the safe transfer of
the Wintershall Dea portfolio
to Harbour ownership
Regrettably, we had one Tier
1 event, and three Tier 2
events occur in 2024 on a
reported basis. All events were
rigorously investigated by
management, with learnings
shared across the company
Increased production whilst
reducing unit operating cost
on a pro forma basis
GHG emissions materially
lowered on a pro forma basis
PRIORITIES FOR 2025
Continuous improvement in our
safety performance, embedding
our strong safety culture across
the enlarged portfolio
Maintain strong, positive and
influential relationships with
our joint venture partners
and suppliers
Maintain a competitive cost
base, driving simplification
and efficiency improvements
through integration
Continued progress towards
our commitment to reduce GHG
emissions by 50 per cent by
2030 (versus a 2018 baseline)
HIGH QUALITY
& RESILIENT
Leverage our full cycle
capability to strengthen
our portfolio
PROGRESS IN 2024
Completed the Wintershall Dea
transaction, lowering our unit
cost to $13.5/boe (pro forma
2024) from c.$16.4/boe in
2023, and lowering our GHG
intensity from 22 kgCO
2
e/boe in
2023 to 14 kgCO
2
e/boe on a net
equity pro forma basis in 2024
Progressed our organic growth
opportunities in Mexico (Zama,
Kan), Indonesia (Tangkulo,
Layaran) and Argentina
(Southern Energy FLNG project
participation agreement)
Progressed our CCS projects,
including substantially
completing FEED at Viking
(UK) and taking a final
investment decision on
Greensand Future (Denmark)
Agreed sale of non-core
assets in Vietnam and exited
an uncompetitive CCS licence
in the UK
PRIORITIES FOR 2025
Advance organic growth
opportunities in Mexico,
Indonesia and Argentina
Continue to high grade our
CCS portfolio, focusing on
competitively advantaged
projects with long-term
cash flow potential
Continue to evaluate M&A
opportunities, with a particular
focus on improving our reserve
life, increasing our operational
control and adding oil weighted
production near term
SCALE &
DIVERSITY
Maintain a high quality
portfolio of reserves
and resources
PROGRESS IN 2024
Three times increase in
2P reserves, reflecting
the completion of the
Wintershall Dea transaction
2P reserves significantly
increased to 1.2 billion boe with
material positions acquired in
Norway, Germany, Argentina,
Mexico and North Africa
Significantly increased and
diversified our 2C resource
base to 1.9 billion boe, providing
multiple high quality options for
conversion into 2P reserves
Progressed projects near
existing infrastructure,
including production start-up
from Fénix in Argentina and
Talbot in the UK
Exploration success in and
around our key hubs in Norway,
UK and Mexico
PRIORITIES FOR 2025
Execution of the capital
programme, including
successful production start-up
from Maria Phase 2 (Norway) in
summer 2025
Mature high quality,
infrastructure-led investment
opportunities, including
delivery of four exploration
wells in Norway
High grade our reserves and
resource portfolio and ensure
a healthy pipeline of longer-
term organic and inorganic
investment options
OUR STRATEGY & BUSINESS MODEL
Well positioned for the future
Creating value through continued strategic delivery
LONG-TERM VALUE DRIVERS:
OUR STRATEGY
Considerable balance sheet
strength
Investment grade credit ratings
achieved, providing stable access to
lower cost sources of capital and
more flexible financing terms.
Safe transfer of the Wintershall Dea
portfolio to Harbour
Comprehensive transition process
to systematically prepare for the
safe transfer of the Wintershall Dea
portfolio to Harbour which we
achieved in September.
Completion of the transformational
Wintershall Dea transaction
The Wintershall Dea acquisition
transforms our portfolio and propels
Harbour into a new peer group that
includes the world’s largest global
independent oil and gas companies.
STRATEGY IN ACTION
STRATEGY IN ACTION
STRATEGY IN ACTION
Production start-up
from Talbot
Delivery of the Harbour UK-operated
Talbot project, on schedule and within
budget, with zero recordable injuries,
supporting 2025 production.
STRATEGY IN ACTION
12
Harbour Energy plc
Annual Report & Accounts 2024
HOW WE CREATE VALUE:
OUR BUSINESS MODEL
WHO THAT VALUE BENEFITS:
OUR STAKEHOLDERS
Our employees
74
%
Response rate to our employee pulse survey,
which gave a generally positive result on the
impacts of the Wintershall Dea transaction
Government & regulators
$1.5
bn
Paid in taxes
Our investors & shareholders
$455m
Annual dividend policy commitment
Our lenders
€1.6
bn
Investment grade bonds issued enabling
quick repayment of $1.5bn bridge facility
Our JV partners,
suppliers & customers
c.$2.5
bn
Of spend with our suppliers
Wider society
c.$6.3
bn
Of economic value created
SUSTAINABILITY REVIEW
READ MORE ON PAGE 38
ENGAGING WITH OUR STAKEHOLDERS
READ MORE ON PAGE 14
DISCIPLINED CAPITAL ALLOCATION
& PORTFOLIO MANAGEMENT
MATERIAL CASH FLOW
GENERATION
SELECTIVE M&A
Targeting high quality
assets that strengthen
our portfolio
ORGANIC INVESTMENT
Exploring for new resources
near existing infrastructure,
and maturing our resources
and reserves into production
CCS
Building an advantaged CCS portfolio
with long-term cash flow potential
DECOMMISSIONING
Responsibly and efficiently
decommissioning our retired infrastructure
Production operations
Maximising value and cash flow from
our existing oil and gas portfolio
13
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
ENGAGING WITH OUR STAKEHOLDERS
Working together to create shared value
We are a global business, and what we do and how we work affects a broad range
of stakeholders. We engage with these stakeholders to understand and respond
to the issues that are important to them.
ACTIONS AND OUTCOMES
In 2024, we continued our successful leadership
engagement, hosting over 50 events across the year.
Actions identified in our last employee engagement
survey were implemented, including moving to new
offices with an improved working environment in
several locations.
We also took steps to improve our career development
framework across the company, including the
appointment of an SVP for Talent & Culture and
a head of Technical Learning and Development.
A key focus for the year was the transition and
integration of new colleagues from Wintershall Dea
into Harbour. Pre-completion, Harbour hosted
face-to-face events with future colleagues in
all Wintershall Dea offices. Post-completion, a
leadership roadshow visited every Wintershall Dea
Business Unit location to welcome new colleagues
to Harbour. We are building relationships with the
Works Councils in Germany and Norway, and aim
to add representatives from all new locations to
our Global Staff Forum in 2025.
We refreshed our values and behaviours to better
reflect the culture we have built over the past few
years (see pages 18 and 19) and these have been
well received by both existing and new colleagues.
Issues raised in our 2024 pulse survey were shared
with our Board, leaders and employees, and are
being addressed. In addition, a company-wide
engagement survey is planned for 2025.
OUR EMPLOYEES
WHY IS IT IMPORTANT TO ENGAGE?
Harbour’s success depends upon our ability to
attract and retain talented employees who can
work collaboratively to deliver our strategy. In
2024, following the Wintershall Dea transaction,
Harbour Energy onboarded nearly 1,300 new
employees; hearing and responding to their
concerns was essential to managing uncertainty
and creating a positive working environment
across our enlarged business.
HOW DO WE ENGAGE?
We engage regularly through face-to-face and
digital channels, including town and village halls,
small informal events and social channels. Our
employee-led networks, each with a leadership
team sponsor, provide peer support. Our CEO
meets regularly with our elected Global Staff
Forum and other directors join these sessions
twice each year. In 2024 there was additional
focus on engaging with prospective employees
joining Harbour from Wintershall Dea as well as
the wider workforce, given the organisational
changes taking effect on completion of the
acquisition. In Q4 we carried out a pulse survey to
gauge employee sentiment across the company.
WHAT ISSUES ARE IMPORTANT TO THEM?
Health, safety and wellbeing
Career development
Inclusion, including acceptance
of different cultures
Integration of the Wintershall Dea portfolio
ACTIONS AND OUTCOMES
In 2024, much of our engagement was driven by
the Wintershall Dea transaction, which required
more than 15 regulatory, anti-trust and foreign
direct investment approvals from governments and
regulators in 11 different jurisdictions. We prioritised
building strong relationships with ministers,
government departments, trade bodies, NOCs and
regulators, which helped facilitate timely approvals
for the deal, allowing us to complete the acquisition
ahead of schedule.
In addition, we continued to highlight the importance
of a supportive and stable fiscal environment for the
sector, enabling the investment in future production
that supports jobs, energy security and the economy.
This was and continues to be especially important in
the UK, which now has the most onerous fiscal regime
of all countries in which we operate. In the UK, we
have argued for a fairer and long-term approach to the
fiscal environment for domestic oil and gas producers
and also for a more supportive policy environment for
the accelerated deployment of CCS.
In other countries, engagement has centred on
progressing significant oil and gas projects including
Zama (Mexico), Vaca Muerta (Argentina) and
the discoveries in the Andaman Sea (Indonesia).
Engagement in Mexico, Argentina and Egypt has
also included discussions related to late payment
challenges and foreign currency restrictions.
GOVERNMENT & REGULATORS
WHY IS IT IMPORTANT TO ENGAGE?
Government and regulatory stakeholders in
our operating regions make decisions that
materially impact our business, so it is important
they understand Harbour’s purpose, strategy,
expertise and contributions and that we
understand their priorities. This is more important
as the Wintershall Dea transaction extended
our global footprint to 11 countries, significantly
increasing our government and regulatory
stakeholder community.
HOW DO WE ENGAGE?
Harbour engages through direct meetings with
ministers, their advisers and officials, and by
contributing to government consultations and via
trade bodies. In some jurisdictions we partner
with or work alongside National Oil Companies
(NOCs), so we prioritise strong relationships
with these companies as well.
WHAT ISSUES ARE IMPORTANT TO THEM?
Financial and operational performance
Capital allocation, including commitment
to investment grade credit ratings and
shareholder returns
M&A strategy and progress
Integration of the Wintershall Dea acquisition
and outlook for the combined business
Our net zero aspiration and CCS projects
ACTIONS AND OUTCOMES
We have continued to build trust with the capital
markets through proactive engagement, delivering
against guidance, and successfully executing
our strategy.
In July 2024, shareholders were invited to vote
on the proposed Wintershall Dea transaction at a
General Meeting. Significant information enabling
shareholders to make an informed decision
was provided, including webcast presentations
by management and a circular and prospectus
containing an independent valuation of the target
portfolio. Shareholders approved the transaction
with 99.99 per cent of votes cast in favour.
In March, we completed the voluntary bondholder
consent process relating to the porting of €4.9 billion
of Wintershall Dea bonds and, post completion of the
transaction, we successfully issued €1.6 billion of
senior bonds, enabling repayment and cancellation
of the $1.5 billion acquisition bridge facility.
Consultation and feedback from institutional
shareholders also shaped the evolution of our
Remuneration Policy.
OUR INVESTORS
& SHAREHOLDERS
WHY IS IT IMPORTANT TO ENGAGE?
Harbour seeks to develop an investor base of
long-term shareholders and debt investors who
are supportive of our strategy. By ensuring our
strategy and objectives are well understood and
by delivering against them, we maintain access
to long-term providers of capital.
HOW DO WE ENGAGE?
We engage regularly with our shareholders,
bondholders and potential investors through
meetings, conferences and investor events. We
hosted more than 420 meetings in 2024, in one-to-
one and group settings, both in-person and virtually.
The Wintershall Dea transaction has resulted in a
significant increase in investor interest, especially from
large US-based institutions, leading to an increase in
time spent meeting investors in the US. In November,
we hosted a live presentation for retail investors,
allowing them to hear directly from the company.
The CEO, CFO, Investor Relations and Treasury are
primarily responsible for this engagement. Other
directors engage on areas such as remuneration
policy and are also available at Harbour’s AGM.
WHAT ISSUES ARE IMPORTANT TO THEM?
Financial and operational performance
Capital allocation, including commitment
to investment grade credit ratings and
shareholder returns
M&A strategy and progress
Integration of the Wintershall Dea transaction
and outlook for the combined business
Our net zero aspiration and CCS projects
14
Harbour Energy plc
Annual Report & Accounts 2024
Section 172(1) statement
The disclosure on the following pages (14 to 17)
describes how the directors have had regard to the
matters set out in section 172(1) (a) to (f) and forms
the directors’ statement required under section
414CZA of the UK Companies Act 2006.
Information regarding our assessment of environmental
and community issues associated with our operations,
including how we aim to maximise our positive impacts
and minimise the negative impacts, can be found in the
Sustainability review on pages 38 to 59.
ACTIONS AND OUTCOMES
We have a disciplined financial framework and
capital allocation policy to ensure we maintain
significant liquidity and access to capital. This
includes a commitment to our investment grade
credit ratings, ensuring, over 2024, that leverage
remained below 1.5x on average through the
commodity price cycle, and hedging to protect
against price volatility.
Since the announcement of the Wintershall Dea
transaction in December 2023, we have maintained
a supportive senior bank syndicate and have been
able to bring additional banks into a new $3 billion
revolving credit facility (RCF).The margin on the
RCF is approximately half that of the reserve based
lending facility (RBL) it replaced. Additionally, the
bank syndicate funded the $1.5 billion bridge
facility, which was utilised for the cash portion of the
consideration for the Wintershall Dea transaction,
and subsequently refinanced in the European bond
market after completion.
We continue to have access to significant
debt capacity, and following completion of the
Wintershall Dea transaction, our corporate credit
rating is now Baa2/BBB-/BBB-, stable outlook,
with the three main credit rating agencies, Moody’s,
S&P Global and Fitch, respectively. The ESG
disclosure agency CDP reaffirmed our corporate
‘B’ rating in 2024.
OUR LENDERS
WHY IS IT IMPORTANT TO ENGAGE?
The upstream oil and gas industry is a capital-
intensive business. By maintaining supportive
relationships with our lenders, and ensuring our
strategy and objectives are well understood, we
can ensure access to long-term debt financing
that enables us to deliver the company strategy,
including investment in high quality investment
opportunities that generate cash flows and
support shareholder returns.
HOW DO WE ENGAGE?
We undertake regular dialogue with the syndicate
banks at varying levels of seniority and across
multiple teams, both bi-laterally and via an annual
bankers’ presentation. Members of the leadership
team give performance updates at these sessions,
followed by questions and answers.
WHAT ISSUES ARE IMPORTANT TO THEM?
Financial and operational performance
Fiscal stability
Safeguarding the balance sheet, including
our commitment to investment grade
credit ratings
Financial risk management, including hedging
M&A strategy and progress
Sustainability and ESG considerations,
including the impact of our operations and
our CCS projects
ACTIONS AND OUTCOMES
During 2024, we completed the rationalisation
of supply chain management within Harbour’s
UK business, focusing on establishing strategic
partnerships with suppliers to deliver better value,
mitigate risks to our operations and support the
delivery of our business objectives. We will extend
this approach across our company in 2025, and
have agreed a supply chain integration plan for
developing long-term strategic partnerships across
the new portfolio.
The Wintershall Dea transaction brought a large
non-operated portfolio into Harbour, in addition
to our existing non-operated assets. Our aim is
to be a trusted and reliable partner to operators,
and to nurture the collaborative working relationships
that will manage risk and deliver value to the
licence and to the countries in which we operate
in the most reliable and sustainable way.
During 2024, as several long-term sales
arrangements rolled off, Harbour began to
enjoy increased flexibility to directly market our
UK-produced hydrocarbons to a broader set of
buyers. This flexibility has already started to deliver
better value for the business. The integration of
the new portfolio offers further scope to develop
a more global market view and broaden/deepen
relationships with global customers.
OUR JV PARTNERS,
SUPPLIERS & CUSTOMERS
WHY IS IT IMPORTANT TO ENGAGE?
The upstream oil and gas industry relies on
joint venture (JV) partners and a complex value
chain of suppliers who enable us to deliver oil
and gas to our customers. Maintaining strong
relationships across this value chain enables
access to the resources, labour and the specialist
goods and services we require to carry out our
business safely, responsibly and efficiently.
HOW DO WE ENGAGE?
We have structured engagement plans in
place for these key stakeholders. For example,
Operating Committee Meetings are the forum
for joint venture partner decision-making,
while we regularly engage with our contractors
through scheduled reviews and supplier audits.
Meanwhile, our in-house marketing and trading
team maintains an open dialogue with our
global customers.
WHAT ISSUES ARE IMPORTANT TO THEM?
Asset stewardship and life of field
programmes (JV partners)
Personal and process safety and
operational performance
Financial capability
Transparency on future activity and
opportunities (supply chain)
Quality and reliability of supply (customers)
ACTIONS AND OUTCOMES
We continued to deliver energy safely and
responsibly, from a much larger production base.
We are committed to managing our environmental
impact by using resources efficiently and reducing
emissions and waste. We joined the UN’s Oil & Gas
Methane Partnership (OGMP 2.0) in 2024, and are
aiming to achieve their Gold Standard for methane
emissions reporting and reduction.
Harbour generated c.$6.3 billion of economic
value in 2024, through employment, payments to
suppliers, tax payments to host governments and
social investment. Our sponsorship budget supports
the promotion of a safe and responsible oil and
gas industry, and we continued to support local
communities with social investment that promotes
education, health and economic development.
Social investment and sponsorship totalled
$1.5 million across our global business.
We have harmonised governance and ethics standards
across our enlarged business. A programme of
mandatory training is in place to ensure employees
understand and comply with our standards.
WIDER SOCIETY
WHY IS IT IMPORTANT TO ENGAGE?
A company’s employees, customers and suppliers
are part of the communities and wider society
in which they operate. We aim to be a good
corporate citizen, offering high quality jobs and
a safe work environment, supporting a large
supplier network, reducing our environmental
impact and contributing to the communities
in which we operate.
HOW DO WE ENGAGE?
Harbour supports local communities through its
business activities, which contribute to economic
vitality, supported by philanthropic activities
and sponsorships. Where projects impact on
local communities, we actively engage with
the community to explain how we work to try to
minimise our impact and share the economic
value created. We support key industry bodies
and events to promote the economic wellbeing
of our communities and host countries.
We help disadvantaged communities through
local outreach and charitable giving.
WHAT ISSUES ARE IMPORTANT TO THEM?
Environmental impact and safety
Economic value and social investment
Governance and ethics
15
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
ENGAGING WITH OUR STAKEHOLDERS
CONTINUED
These three case studies are examples
of how our Board considers stakeholders’
interests in its decision-making.
The duty of our Board is to promote the
success of Harbour for our shareholders
whilst having due regard for the
interests of other stakeholder groups.
In discharging this duty, the directors
must consider the likely consequences
of their decisions in the long term whilst
maintaining our corporate reputation
and adhering to the highest standards
of business conduct.
Our board of directors carries out its
decision-making with this duty in mind.
Board discussions
The scale of the Wintershall Dea
transaction, which nearly tripled Harbour’s
daily production and extended our portfolio
into 11 countries, significantly impacted
all our stakeholder groups. During the
transition period between announcement of
the deal (December 2023) and completion
(September 2024), the Board continued to
consider the impact of the transaction on
key stakeholder groups. Particular attention
was given to the quality of engagement
with existing and future employees from
Wintershall Dea, the governments from
which various approvals were required, and
our investors and our lenders, to secure
their support for the transaction and ensure
the safe and efficient transfer of people
and assets to Harbour.
Board’s consideration of stakeholder
impacts in reaching its decision
The Board considered the impact of the
transaction on a wide range of stakeholders
whose support was vital to the completion
of the transaction.
Building the confidence of shareholders
and investors, our providers of capital, was
a primary objective. Executive directors
undertook an extensive programme of
engagement with large investors to
demonstrate the strategic rationale of the
acquisition, the value creation opportunities
the new portfolio presented, and a planned
dividend increase. A detailed prospectus
was published in June and, at a General
Meeting in July, shareholders voted
overwhelmingly in favour of the transaction
(99.9 per cent of votes cast were in favour).
The Board also focused on ensuring the
support of our lenders for the transaction,
and the continued availability of debt
financing post-completion. We helped
lenders understand the high quality
portfolio we were acquiring and the careful
structuring of the transaction, including
the porting of low-cost bonds from
Wintershall Dea. Together, these would
maintain Harbour’s financial strength
while also delivering an investment
grade credit rating post-completion.
The multi-jurisdictional nature of the
transaction required approvals from many
regulatory and government bodies. The Board
endorsed a CEO-led outreach programme
with each prospective new Business Unit,
including meetings with key regulatory/
government stakeholders, to secure support
and approvals for the transaction.
The CEO visited every one of our Business
Units – including those acquired from
Wintershall Dea – during the year, most of
them twice, often accompanied by other
members of the Leadership Team. During
the visits local town halls were held,
providing an opportunity for employees to
learn about Harbour and our culture, and
for us to hear their perspectives. Several
additional events were held for employees
in Wintershall Dea’s corporate centre, who
were not being automatically transferred
to Harbour as part of the transaction.
The objective of these engagements was
to recruit Wintershall Dea employees to fill
new roles in Harbour’s expanded corporate
centre, so we could benefit from their
knowledge of the assets being acquired
and enable a more efficient integration.
Board discussions were also held to focus
on retaining key personnel from both
Harbour Energy and Wintershall Dea who
were deemed critical to the safe transfer
of the business to Harbour.
Thanks to careful planning, the receipt of
all necessary consents and the cooperative
transition process, the Wintershall Dea
transaction was completed safely, ahead
of schedule, in September 2024.
RELEVANT STRATEGIC DRIVERS
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
KEY STAKEHOLDER GROUPS IMPACTED
OUR EMPLOYEES
GOVERNMENT & REGULATORS
OUR INVESTORS & SHAREHOLDERS
OUR LENDERS
OUR JV PARTNERS, SUPPLIERS & CUSTOMERS
WIDER SOCIETY
We aim to engage openly and
honestly on issues of importance
to our stakeholders and to establish
strong and enduring relationships
with the key stakeholders upon
whom our business success relies.
To deliver growth
and diversification
by completing the
Wintershall Dea
transaction
$11.2
bn
Acquisition of asset portfolio
CASE STUDY 1
16
Harbour Energy plc
Annual Report & Accounts 2024
OUR STRATEGIC DRIVERS
SAFE & RESPONSIBLE
Ensure safe, reliable and responsible operations
SCALE & DIVERSITY
Maintain a high quality portfolio of reserves and resources
HIGH QUALITY & RESILIENT
Leverage our full cycle capability to strengthen our portfolio
FINANCIAL DISCIPLINE
Ensure financial strength through the commodity
price cycle
Board discussions
In order to fund the $11.2 billion acquisition of
the Wintershall Dea portfolio, Harbour secured a
$1.5 billion acquisition bridge facility. Replacing
this short-term funding facility with longer-term
financing was a priority post-completion.
Board’s consideration of stakeholder
impacts in reaching its decision
Following the completion of the Wintershall Dea
transaction, Harbour’s credit rating was confirmed
as investment grade, introducing the option of
accessing the investment grade bond markets.
The Board considered that refinancing of the
bridge facility quickly was in the interests of
Harbour’s shareholders and lenders, as it would
reduce financing costs, simplify the capital
structure and improve the debt maturity profile.
Shortly after completion, the Board approved the
RELEVANT STRATEGIC DRIVERS
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
KEY STAKEHOLDER GROUPS IMPACTED
OUR INVESTORS & SHAREHOLDERS
OUR LENDERS
OUR JV PARTNERS, SUPPLIERS & CUSTOMERS
Endorsement of
new values and
behaviours to
support a strong
corporate culture
Responsible funding
of the company
c.3,400
Workforce
1
€1.6
bn
Investment grade bond issuance
Central to this is ensuring it understands
the views of our stakeholders on key issues
and how those stakeholders will be impacted
by a particular course of action.
While the Board sets the parameters by
which we develop, maintain and enhance
relationships with our stakeholders,
engagement cannot be undertaken by
the Board alone; our Leadership Team also
CASE STUDY 2
CASE STUDY 3
engages and fosters positive relationships
with our key stakeholders. The Board
considers stakeholder views when making
key decisions. For example, the information
is used in investment papers, strategy
documents and budget proposals, to
ensure that decisions are made with
due consideration of all stakeholders.
issuance of bonds with a value of €1.6 billion
to repay the bridge facility. This was executed
across two tranches, five years and eight years,
with over two times oversubscription from
investors, demonstrating strong demand and
establishing Harbour as an investment grade
bond issuer.
Board discussions
Since Harbour was founded in 2014, it has made
four acquisitions in line with its strategy of becoming
a global, diversified upstream producer, each
time bringing people from legacy companies into
Harbour. The Board considers that establishing and
maintaining a distinctive Harbour Energy corporate
culture, one that both motivates employees and
sets high standards of behaviour, is critical to
Harbour’s continued success, and this is therefore
regularly discussed by the Board. With the company
pursuing its largest acquisition to date, the Board
endorsed a plan proposed by management to
refresh Harbour’s corporate values and behaviours.
Board’s consideration of stakeholder
impacts in reaching its decision
Ahead of the completion of the Wintershall Dea
transaction, which would bring some 1,300 new
employees plus a large number of contractors
into the business, Harbour’s senior leaders
discussed whether Harbour’s existing corporate
values and behaviours – established four years
ago – properly reflected the culture we have
built and aspire to. These discussions resulted
in a recommendation to evolve the values and
behaviours and express them in more direct
RELEVANT STRATEGIC DRIVERS
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
KEY STAKEHOLDER GROUPS IMPACTED
OUR EMPLOYEES
OUR INVESTORS & SHAREHOLDERS
OUR JV PARTNERS, SUPPLIERS & CUSTOMERS
WIDER SOCIETY
language – We care, We work together, We
aim high, We deliver. The CEO presented the
recommendation to the Board for approval.
The Board agreed that the proposed values
better reflected Harbour’s culture, what makes
us distinctive from other companies, and what
we are proud of. It was considered important
that the refreshed values were in place prior to
completion of the Wintershall Dea transaction
and then shared as part of the onboarding
process for new employees, to explain our
culture and set the right expectations from the
start. The new values were rolled out within
legacy Harbour in August and shared with the
Wintershall Dea employees joining us upon
completion in September.
1
Includes employees and direct contract staff.
17
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
OUR CULTURE & VALUES
Our core values represent who
we are and what we stand for
We
care
about each other, our safety and the environment
We demonstrate we care
for each other’s safety
and wellbeing every day
We are inclusive, honest
and respectful, always
acting with integrity and
speaking up when actions
or behaviours are not in line
with our policies or values
We actively consider the
environmental impact of
our decisions
For me, ‘We care’ is
about providing the
best support we can to
our field colleagues –
giving them the tools to
manage the risks and
the confidence to ‘stop
the job’ if necessary.
PETER BAMFORTH
CORPORATE PROCESS SAFETY
MANAGER, UK
We
work together
achieving more through communication
and collaboration
We work within our teams
and across organisational
boundaries to learn,
resolve challenges and
achieve goals
We build strong trust-
based relationships
with internal and external
stakeholders
We regularly invite,
provide and accept
feedback – both positive
and constructive
Now that we’re a
workforce of c.3,400,
having global
communities where
people exchange ideas
and help each other
to solve challenges
is a very powerful tool.
STEPHAN ALBRECHT
VP OGARRIO, MEXICO
DEFINING OUR CULTURE
18
Harbour Energy plc
Annual Report & Accounts 2024
We
deliver
with a can-do attitude
FIND OUT MORE ONLINE
HARBOURENERGY.COM/ABOUT-US/OUR-VALUES-CODE-OF-CONDUCT
GOVERNANCE
READ MORE ON PAGE 70
SUSTAINABILITY REVIEW
READ MORE ON PAGE 38
We drive for simplicity,
efficiency and action
We take personal
responsibility for delivery
of our plans, targets
and results
We recognise and reward
high performance delivered
with the right behaviours
These are the values that Harbour expects colleagues
to abide by and demonstrate in all their business
dealings with internal and external stakeholders,
and they are reinforced through our reward and
performance management processes.
We
aim high
seizing opportunities and embracing challenges
We measure our
performance relative
to best-in-class and
continuously improve
We innovate technically
and commercially,
encouraging new
ideas and challenging
assumptions
We value personal
development, enabling
everyone to reach their
full potential
When aiming high, we
can’t be complacent.
We must actively seek
to learn from experience,
implement better ways
of working and develop
more robust solutions.
IDA KRISTIN MO
SENIOR SUBSEA COMPLETION
ENGINEER, NORWAY
‘We deliver’ means creating
lasting impact and value
by consistently exceeding
expectations. Through
teamwork, innovation and
the pursuit of excellence –
exemplified in our proposed
participation in Argentina’s
first FLNG project – we
ensure sustainable growth
and success for our
shareholders and partners.
GASTON BENTANCURT
VP BUSINESS SERVICES, ARGENTINA
LIVING OUR VALUES
19
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
2024
2023
2022
1.0
0.7
0.8
2024
2023
2022
4
0
1
2024
2023
2022
21
26
23
2024
2023
2022
258
186
208
2024
2023
2022
16.5
16.4
13.9
2024
2023
2022
2C: 1,910
2C: 455
2P: 1,249
2C: 519
2P: 361
2P: 410
KEY PERFORMANCE INDICATORS
Measuring our performance
Safety and the environment
1
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
HIGH QUALITY & RESILIENT
SCALE & DIVERSITY
FINANCIAL DISCIPLINE
1.0
Per million
hours worked
Objective
Harbour is committed to ensuring the safety of its
people, applying rigorous practices and procedures.
2024 progress
There was an increase in TRIR partly due to
the addition of new operating regions from
Wintershall Dea
Initiatives have been implemented to
drive improvement, including in the legacy
Wintershall Dea locations
A Global Safety Day was held in October 2024 to
help embed a safety culture across the enlarged
portfolio and share collective experiences
Exceptional individual and team safety
performance recognised through the CEO
Safety Awards
4
Tier 1 & 2 events
Objective
Harbour aims to maintain the highest standards
of operational integrity to prevent releases of
hazardous material from primary containment.
2024 progress
One Tier 1 process safety event in Indonesia
Three Tier 2 process safety events at assets
in Indonesia, Norway and the UK
All events have been rigorously investigated,
resulting in actions to improve performance
Continued detailed review of major hazards
across the portfolio to identify inherent process
safety risks and effectiveness of controls
26
kgCO
2
e/boe
Objective
Harbour is committed to managing its
environmental impacts and is taking action
to reduce operational emissions.
2024 progress
GHG intensity on a gross operated basis
increased year on year to 26 kgCO
2
e/boe
Retained target of a 50 per cent reduction in
Scope 1 and 2 emissions on a gross operated
basis by 2030 against a 2018 baseline, including
for the enlarged portfolio
Additionally, retained targets to achieve zero
routine flaring by 2030 and a methane intensity
of less than 0.2 per cent by 2025
Total recordable injury rate (TRIR)
Process safety
2
GHG intensity (Scope 1 and 2)
3
Operational
Objective
Harbour aims to add reserves through the
conversion of its 2C resources into 2P reserves via
targeted investment. We also seek to add reserves
via selective, value-accretive M&A.
2024 progress
2P reserves more than tripled to 1.2 bnboe
reflecting completion of the transformational
Wintershall Dea acquisition partially offset by
2024 production
2C resources also more than tripled to 1.9 bnboe,
driven by the acquisition, providing a large and
diverse set of high quality opportunities for potential
future conversion into 2P reserves
Organic additions to 2C during 2024 included
exploration success in Indonesia, Norway and the UK,
offset by high grading of our UK 2C resource portfolio
Objective
Harbour strives for competitive operating costs
without compromising on health, safety and the
environment, enabling robust margins through
the commodity price cycle.
2024 progress
Operating costs on an absolute basis increased year
on year to $1.6 billion (2023: $1.1 billion) primarily
reflecting the addition of four months’ contribution
from the Wintershall Dea assets as well as a higher
dollar to sterling exchange rate for the legacy portfolio
On a unit basis, operating costs were broadly
flat year on year at $16.5/boe, reflecting lower
volumes from the legacy Harbour asset base, offset
by the lower cost per boe in the acquired portfolio
On a pro forma basis, operating costs were
$13.5/boe
3.2
bnboe
5
$16.5
/boe
258
kboepd
Objective
Harbour aims to maximise value from its producing
asset base, striving for efficient operations and
reinvesting in the portfolio to limit the impact of
natural decline.
2024 progress
Production of 258 kboepd, an increase of 39
per cent reflecting four months’ contribution
from the acquired Wintershall Dea portfolio of
assets with material contributions from Norway,
Germany, Argentina, North Africa and Mexico
In the UK, natural decline and an unusually
high level of planned summer shutdowns
were partially offset by new wells and projects
on-stream
Reserves and resources
4
Operating costs
Production
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
HIGH QUALITY & RESILIENT
SCALE & DIVERSITY
FINANCIAL DISCIPLINE
20
Harbour Energy plc
Annual Report & Accounts 2024
2024
2023
2022
(0.1)
1.0
2.1
2024
2023
2022
1.1x
0.1x
0.2x
2024
2023
2022
328
400
600
2024
2023
2022
4.0
2.7
4.0
OUR STRATEGIC DRIVERS
SAFE & RESPONSIBLE
Ensure safe, reliable and
responsible operations
SCALE & DIVERSITY
Maintain a high quality portfolio
of reserves and resources
HIGH QUALITY & RESILIENT
Leverage our full cycle capability
to strengthen our portfolio
1
We report our safety and environmental metrics on a gross operated basis.
2
Reported as per the International Association of Oil and Gas Producers (IOGP’s) Process Safety – Recommended Practice on Key Performance Indicators, report 456, 2018.
3
Our 2024 GHG intensity includes our Scope 1 and 2 emissions on a gross operated basis. For more details please see the Sustainability review on page 52.
4
Volumes reflect management estimates. DeGolyer and MacNaughton (D&M) as a competent independent person have evaluated 90 per cent of the Group’s
working interest 2P reserves and 60 per cent of the Group’s 2C resources and consider Harbour’s estimates to be fair and reasonable.
5
Values represented in the chart are presented in mmboe.
6
Non-IFRS measure – see Glossary for the definition.
Financial
$328
million
Objective
Harbour aims to deliver both growth and yield to its
shareholders. Shareholder returns are one of our three
capital allocation priorities, along with ensuring both
balance sheet strength and a robust and diverse portfolio.
2024 progress
We approved $328 million of dividends for 2024,
which will result in c.$1.3 billion of shareholder
distributions since listing on the London Stock
Exchange in 2021
Following the completion of the Wintershall Dea
transaction, the Board confirmed its commitment
to an annual dividend of $455 million
1.1
x
At year end
Objective
Harbour aims to keep leverage below 1.5x on average
through the commodity price cycle supported by
prudent capital allocation and a disciplined hedging
programme. We are committed to protecting our
investment grade credit rating through maintaining
capital discipline.
2024 progress
Leverage maintained below 1.5x. This reflects
four months’ contribution from the Wintershall Dea
portfolio. On a pro forma basis leverage was 0.6x
Net debt increased by c.$4.2 billion to c.$4.4 billion
Debt structure transformed with reserve-based
debt facility replaced with unsecured, lower cost
and more flexible bank facilities and bonds
Objective
Harbour aims to deliver predictable and reliable cash
flow, supported by prudent risk management, to enable
financial strength, investment and shareholder returns
through the commodity price cycle.
2024 progress
Harbour had free cash flow of $(0.1) billion outflow
which reflects negative working capital changes of
$0.5 during the year and one-off acquisition costs.
This also reflects significant tax payments in the
legacy business and the phasing of tax payments
for the acquired portfolio
Before the one-off acquisition costs related to deal
transaction fees and change of control payments for
seismic data, totalling c.$0.2 billion, free cash flow
was $0.1 billion inflow
We continued to progress high return infrastructure-
led investment opportunities to support production
and free cash flow in the near to mid term
$(0.1)
billion
Objective
Harbour aims to deliver strong earnings before interest,
tax, depreciation and amortisation, delivered by
proactive cost control and prudent risk management.
2024 progress
EBITDAX increased in the year, primarily driven by
the four-month contribution of the acquired portfolio
A continued focus on cost control including during
the integration of the two portfolios
$4.0
billion
Free cash flow
6
Leverage ratio
6
Shareholder returns approved
EBITDAX
6
FINANCIAL DISCIPLINE
Ensure financial strength through
the commodity price cycle
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
HIGH QUALITY & RESILIENT
SCALE & DIVERSITY
FINANCIAL DISCIPLINE
21
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Norway
UK
Argentina
Germany
North Africa
Mexico
Southeast Asia
37%
24%
20%
10%
4%
4%
1%
Argentina
Mexico
Norway
Southeast Asia
UK
Germany
North Africa
40%
21%
16%
11%
8%
2%
2%
OPERATIONAL REVIEW
Solid operational
performance materially
enhanced by acquisition
Absolute operating costs for 2024
were $1.6 billion (2023: $1.1 billion)
which, on a unit of production basis,
equated to $16.5/boe (2023: $16.4/
boe). This reflects the addition of the
lower cost Wintershall Dea portfolio
offset by higher unit operating costs at
our UK assets due to lower production
volumes. In 2025, unit operating costs
are expected to reduce to c.$14/boe,
benefitting from a full year’s
contribution from the Wintershall Dea
portfolio and continued management
of our UK cost base.
2024 capital expenditure including
decommissioning totalled $1.8 billion
(2023: $1.0 billion). The increase on
the prior year reflects the additional
capital expenditure associated with
the acquired Wintershall Dea assets,
and accelerated capital investment in
the UK ahead of anticipated changes
to the UK fiscal regime. 2025 total
capital expenditure is expected to be
between $2.4-2.6 billion, reflecting
12 months of the Wintershall Dea
portfolio partially offset by materially
reduced capital investment in the UK.
Production averaged 258 kboepd
(2023: 186 kboepd) during 2024, split
c.40 per cent liquids, c.45 per cent
European natural gas and c.15 per
cent other natural gas.
The c.40 per cent increase in production
in 2024 versus 2023 was driven by
the acquisition of the Wintershall Dea
assets. The acquisition completed in
September resulting in our expanded
and diversified global portfolio achieving
rates of c.500 kboepd in the fourth
quarter with material contributions
from Norway, the UK and Argentina.
Production was also supported by
new projects and development wells
coming on-stream in the UK, Argentina
and Norway in the second half of the
year. Looking to 2025, production on
a full year basis is expected to increase
to between 450-475 kboepd reflecting
a full 12 months’ contribution from the
acquired Wintershall Dea assets and
broadly stable production in the UK.
1,910
mmboe
2024 2C resources
1,249
mmboe
2024 2P reserves
22
Harbour Energy plc
Annual Report & Accounts 2024
Safe and responsible operations
A priority during the year was the safe
transfer of the Wintershall Dea portfolio
which we achieved in September. However,
after consistently improving our safety record,
2024 saw Harbour’s total recordable injury
rate increase to 1.0 per million hours worked
(2023: 0.7), in part reflecting the higher TRIR
from the newly acquired assets for the last
four months of 2024. Further, we recorded
our first-ever Tier 1 process safety event –
in Indonesia – along with three Tier 2 events
(2023: zero). All events have been rigorously
investigated, resulting in actions to improve
performance with a particular focus on
strengthening our process safety defences in
Indonesia and reducing our TRIR in Germany.
In 2024, our GHG intensity improved to
14 kgCO
2
e/boe (2023: 22 kgCO
2
e/boe)
on a net equity, pro forma basis, reflecting
the lower emissions intensity of the acquired
portfolio. We remain on track to halve our
gross operated emissions by 2030.
Maximising the value of our producing assets
The majority of Harbour’s capital programme
is focused on infrastructure-led opportunities,
converting reserves into production and cash
flow. These opportunities are typically low risk,
high return investments concentrated around
our existing production hubs, predominantly
in Norway, the UK, Argentina and Germany.
In the UK, 2024 saw Harbour accelerate
drilling around its operated hubs, taking
advantage of tax credits which expired before
year end 2024. This included a return to
drilling at the Britannia satellite fields, with the
Callanish F6 infill well on-stream in July while,
at AELE, the North West Seymour well started
up production in September. At Jocelyn South,
we made a gas condensate discovery which
is being brought on-stream through Harbour’s
Judy platform post period end in Q1 2025.
In addition, in November, Harbour delivered
first oil from its operated Talbot project, a
three well subsea tie-back to J-Area. The
project marked a material milestone for
Harbour and was completed on schedule,
within budget and with no recordable injuries.
In Norway, we continued to mature our pipeline
of high value, short cycle developments. This
includes the Harbour-operated Maria Phase 2
project, a four well subsea tie-back to existing
infrastructure in the Maria field, with production
start-up expected during summer 2025, and
Dvalin North, a subsea tie-back to Dvalin.
At Dvalin North, fabrication of the subsea
infrastructure is well advanced with
development drilling expected to commence in
2026. Harbour has a proven exploration track
record in Norway, helping to support reserve
replacement. This continued in 2024
with six successes from six exploration and
appraisal wells drilled, including the Storjo
gas discovery and successful appraisal
drilling at Adriana/Sabina, both potential
tie-backs to the Skarv hub.
In Argentina, Harbour holds a material
non-operated position and is one of
the country’s largest gas producers.
Production at our offshore CMA-1
concession in the Tierra del Fuego
province was supported by the Fénix gas
project, comprising a three well unmanned
platform tied into existing CMA-1 facilities,
which came on-stream ahead of schedule
in September. Onshore in the Neuquén
province, a multi-pad drilling campaign is
ongoing to maintain gas production from
our Aguada Pichana Este concession
in the Vaca Muerta unconventional play.
Production is currently constrained
by offtake and local market capacity.
Business Unit
2024
1
(kboepd)
2023
(kboepd)
Norway
52
UK
149
175
Germany
10
Mexico
4
Argentina
21
North Africa
12
Southeast Asia
11
11
Total
258
2
186
1
Reflects c. four months of production from the Wintershall Dea assets.
2
Because of rounding, some totals may not agree exactly with the sum of their component parts.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
23
OPERATIONAL REVIEW
CONTINUED
Elsewhere, in Germany, development
activities across our three production hubs
continued to support stable production. In
Egypt, the two Raven West infill wells at West
Nile Delta were progressed with production
start-up from the first well achieved post
period end in February 2025. In Indonesia,
Harbour successfully amended its gas sales
agreements with the Singapore buyers of
Natuna Sea Block A gas, increasing the
take-or-pay commitment under a tiered
pricing structure, enabling higher production
in the second half of 2024.
As at year end 2024, Harbour’s proven and
probable (2P) reserves on a working interest
basis stood at 1.25 bnboe, more than three
times higher than that at year end 2023
(2023: 0.36 bnboe). This increase was
driven by the addition of 1.0 bnboe from the
Wintershall Dea transaction, offsetting the
impact of production by more than tenfold.
Strategic investment options
A broad set of major projects with the
potential for material reserves replacement
During 2024, Harbour’s 2C resources more
than tripled to 1.91 bnboe (2023: 0.52
bnboe), driven by the Wintershall Dea
transaction and providing significant reserve
replacement opportunities. Organic
additions to our 2C resources included
exploration success in Indonesia, Norway
and the UK, partially offset by revisions
to our UK resources, largely the result of
changes to the fiscal environment.
Harbour’s 2C resources are split c.40 per
cent in high value, near infrastructure
opportunities, mainly in Norway, the UK and
Argentina; c.30 per cent in conventional
offshore growth projects in Mexico and
Indonesia; with the remaining c.30 per cent
in the globally competitive, unconventional
Vaca Muerta shale play, onshore Argentina.
In Mexico, through the Wintershall Dea
transaction, Harbour increased its interest
in the offshore Zama and Kan oil fields and
obtained an interest in the offshore Polok
and Naajal discoveries. At Zama, FEED on
the approved unit development plan was
substantially completed in 2024. The Zama
partners are now in discussions with Pemex
to optimise the development concepts and
accelerate first oil. A positive final investment
decision at Zama would result in significant
2C resource moving into 2P reserves,
replacing the equivalent of over a year’s
worth of Group production. To the southwest
of Zama, appraisal drilling was successfully
completed at the Harbour operated Kan
oil discovery in Block 30. Work to identify
the optimum development concept will be
undertaken during 2025.
In August, a multi-well exploration and
appraisal campaign across our Andaman Sea
acreage in Indonesia was completed and
included material gas discoveries at Layaran
and Tangkulo on Andaman South (Harbour
20 per cent). In addition, Harbour secured a
60 per cent operated interest in the Central
Andaman licence, which includes an
extension of the Layaran discovery. Harbour,
together with its partners, is now evaluating
potential development options, including
an accelerated development at Tangkulo.
Argentina represents the largest single
component of Harbour’s 2C resources, with
770 mmboe of 2C resources. In Q4, Harbour
signed a participation agreement to acquire
a 15 per cent interest in Southern Energy SA
which is looking to develop a 2.45 million
tonnes per annum (mtpa) FLNG export project
off the coast of the Rio Negro province. It is
anticipated that the upstream partners in
Southern Energy SA will supply the natural
gas for the FLNG project, enabling Harbour’s
Argentina natural gas to access global LNG
export markets. This marks a significant
milestone towards unlocking the accelerated
development of Harbour’s huge natural gas
resource in Argentina. Harbour also has an
interest in the San Roque licence, which is in
the oil window of the Vaca Muerta play, and
discussions with partners for the potential
development of the resource are ongoing.
Shaping the future
of our technical
services function
Alan Bruce joined Harbour in 2024, drawn
by the company’s strong portfolio and
people-focused culture. Now leading the
corporate technical services function,
Alan plays a key role in shaping Harbour’s
operational framework and future success.
With extensive experience in the global oil
and gas industry — including as CEO of Ithaca
Energy — Alan brings a strategic approach to
technical operations, asset management and
safety performance. His team is responsible for
ensuring that Harbour’s Business Units operate
within a structured framework of systems,
standards and processes, while also fostering
collaboration and best practice sharing.
A core priority for 2025 and beyond is
enhancing safety, with technical services
supporting risk assessments, data-driven
insights and structural improvements.
The function also focuses on maximising
asset value and guiding capital allocation
to optimise investments.
Looking ahead, Alan emphasises the
importance of team integration, operational
consistency and continuous improvement
in setting a foundation for future success.
ALAN BRUCE
EVP TECHNICAL SERVICES
There’s a level of professionalism
which is evident wherever I go in the
business. People’s values chime with
my own and there’s a real desire to
do things to a very high standard.
ALAN BRUCE
EVP TECHNICAL SERVICES
24
Harbour Energy plc
Annual Report & Accounts 2024
Outlook
1
Looking to 2025, Harbour will benefit
from a full year’s contribution from
the Wintershall Dea assets resulting
in another step up in production, a
reduction in unit operating costs and
increased free cash flow generation.
In these times of continued geopolitical
uncertainty and commodity price
volatility, the resilience our more diverse
and lower cost portfolio provides is ever
more important. It is also why we aim
for a balance of oil and gas and employ
a disciplined and consistent approach
to hedging. At Brent oil prices of $80/
bbl and UK and European natural gas
prices of $13/mscf, we expect to
generate free cash flow of c.$1.0
billion
1
in 2025. With a $5/bbl change
in Brent oil prices or $1/mscf change in
European natural gas prices impacting
free cash flow by c.$115 million, we
still expect to generate material free
cash flow at current prices.
As we look to the future, we will continue
to prioritise safe and efficient operations
as we complete the integration of our new
Business Units, mature our significant 2C
resource base and maintain disciplined
capital allocation. Our high quality portfolio
with significant optionality, financial
strength and strong management team
mean we are well positioned for continued
execution of our strategy and delivery
of competitive shareholder returns.
Building a competitive CCS business
Harbour’s pipeline of potential CCS projects
was strengthened in 2024 by the acquisition
of the Wintershall Dea portfolio which added
CO
2
storage licences in Denmark, Norway
and the UK, where we already have our
Viking project.
At Viking, FEED was substantially completed
in 2024 and the Development Consent
Order for the proposed new onshore CO
2
pipeline was submitted to the Secretary of
State for approval in December. Clarity
on commercial terms of the project is
anticipated following the conclusion of the
UK Government’s Critical Spending Review
in 2025. Viking’s gross storage resource
increased to 417 million tonnes as at
31 December 2024 (2023: 300 million
tonnes) following the addition of the
storage resources of two new CCS licences
in Viking’s vicinity awarded in 2023.
In December 2024, Harbour together with
its partners announced a final investment
decision (FID) for the Greensand Future
project in Denmark, marking Harbour’s first
CCS project to reach FID. Greensand Future
is a small, short cycle project with high
returns, driven by the ability to reuse existing
infrastructure and defer decommissioning
at the Nini field. The project is targeting first
injection from 2026. Harbour also has an
interest in the cost-advantaged, onshore
Greenstore CCS project in Denmark, which
is being progressed through the appraisal
work programme.
M&A remains a core part of our strategy
With the addition of the Wintershall Dea
portfolio, we have a much wider organic
investment opportunity set with the potential
to support material production well into
the next decade. However, M&A remains
a core dimension of our strategy, and we
will continue to leverage our capabilities
in this area to strengthen our portfolio.
The opportunity set for M&A remains rich
including potential asset sales from large
companies following consolidation, private
companies continuing to look for liquidity,
and small companies seeking scale, access
to capital and relevance with investors.
We will however continue to be disciplined,
prioritising high quality assets which lengthen
our reserve life, provide a balance of oil and
gas, and increase our operational control
while, at the same time, are supportive to
our investment grade credit ratings.
We will also continue to actively manage our
portfolio, ensuring our capital and resources
are deployed in line with our strategy. To this
end, we agreed the sale of our Vietnam
business, post period end, and exited
an uncompetitive CCS licence in the UK.
Strong financial position
The acquisition of the Wintershall Dea
assets is expected to deliver a step up in the
scale and sustainability of our free cash flow,
underpinned by our improved reserve life and
expanded resource base. For 2024, Harbour
delivered free cash flow of $0.1 billion for the
year, before shareholder distributions and
one-off acquisition-related costs. Cash flow is
impacted by a number of period specific items
including a material negative working capital
movement, driven by the adjustment of our
working capital cycle to the increased size of
our business, significant planned shutdowns
in Norway in September post completion,
and payment of previously deferred UK taxes
on 2023 earnings.
The Board has declared a final dividend
of $227.5 million in respect of the 2024
financial year to be paid in May 2025
equating to 13.19 cents per ordinary share,
subject to shareholder approval. This is in line
with the Board’s commitment at the time of
acquisition announcement to increase the
annual dividend to $455 million and signals
the Board’s ongoing confidence in the scale
and longevity of our free cash flow generation.
Harbour’s debt structure was transformed
over 2024 with the reserve-based debt
facility replaced with unsecured, lower cost
and more flexible bank facilities and bonds.
Harbour’s corporate and senior bond credit
ratings were upgraded to investment grade
from all leading credit rating agencies and
in October, Harbour issued €1.6 billion of
Euro denominated, investment grade bonds.
1
2025 guidance/outlook assumes a US dollar to GBP sterling exchange rate of $1.25/£, US dollar to Euro exchange rate of $1.1/€ and a Norwegian NOK to US dollar exchange
rate of NOK11/$. Free cash flow sensitivity assumes mid-point of production and capex guidance. A 1:1 conversion rate for $/mmbtu to $/mscf has been assumed.
At year-end 2024, net debt (before
unamortised fees) stood at $4.7 billion
with leverage, on a pro forma basis, of 0.7x.
Since becoming a public company in 2021,
our sustained operational and financial
delivery along with our disciplined approach
to capital allocation enabled us to repay
c.$2.9 billion of debt and return c.$1.2 billion
to shareholders while retaining the flexibility
to complete a transformational acquisition.
25
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
OPERATIONAL REVIEW
CONTINUED
A high quality, diverse global portfolio
Production in Norway averaged 158 kboepd
from 3 September to 31 December 2024,
contributing 52 kboepd to the Group’s full
year production (2023: N/A). Production was
supported by strong reservoir performance
and high operating efficiency from the Aasta
Hansteen and Skarv hubs, and by the Dvalin
field which reached plateau production
levels. This was offset by the annual planned
maintenance shutdowns, including at our
largest Norway production hubs Skarv and
Gjøa, which ran throughout September.
Operating costs totalled $235 million for
the period 3 September to year end, which
equated to $12.3/boe. Total capital
expenditure amounted to $363 million
during the same period. This largely related
to progressing development activities at the
Harbour-operated Maria Phase 2 and Dvalin
North projects, infill drilling at Skarv and
Njord, and exploration and appraisal drilling
close to existing hubs.
Maria Phase 2 is a four-well subsea tie-back
to existing infrastructure in the Maria field,
with production start-up expected during
summer 2025. At Dvalin North, a subsea
tie-back to Dvalin, fabrication of the
subsea infrastructure is well advanced
with development drilling expected to
commence in 2026. Beyond these,
Harbour has a non-operated interest
in Irpa which is being developed as a
subsea tie-back to Aasta Hansteen; Alve
Nord and Idun North, which are being
developed as subsea tie-backs to Skarv;
and Solveig Phase 2, which is being
developed as a subsea tie-back to the
Edvard Grieg hub.
The Norway Business Unit has a proven
track record of infrastructure-led exploration
and appraisal, helping support future
reserve replacement and production.
This continued in 2024 with six
successes from the six exploration and
appraisal wells drilled. These included
the successful appraisal drilling at the
Harbour-operated Sabina gas discovery,
part of the Adriana/Sabina complex, and
the Aker BP-operated Storjo gas discovery.
Adriana/Sabina and Storjo are potential
tie-backs to the Skarv hub.
52
kboepd
2024 production
65% gas
$12.3/boe operating cost
458mmboe 2P reserves
308mmboe 2C resources
As a result of the Wintershall Dea
transaction, Harbour acquired a significant
asset base in Norway and became the
largest international independent oil and
gas company in the country. Harbour’s
production in Norway is gas weighted
and diversified across several key hubs,
including Skarv, Gjøa and Aasta Hansteen,
providing multiple routes into the
European gas markets.
MICHAEL ZECHNER
MANAGING DIRECTOR
NORWAY
Norway
26
Harbour Energy plc
Annual Report & Accounts 2024
149
kboepd
2024 production
51% gas
$19.9/boe operating cost
295mmboe 2P reserves
143mmboe 2C resources
SCOTT BARR
MANAGING DIRECTOR
UK
UK
This was offset by an unusually high level of
significant planned maintenance shutdowns,
including at Harbour’s largest operated
hubs (Greater Britannia, J-Area, AELE),
and a prolonged unplanned shutdown
at East Irish Sea.
Operating costs in the UK were broadly flat
at $1.1 billion (2023: $1.0 billion). Unit
operating costs were higher at $19.9/boe
due to lower volumes and a stronger sterling
to US dollar exchange rate. Total UK capital
expenditure was $1.0 billion (2023: $0.8
billion). This reflects the Talbot development,
accelerated drilling around our operated
hubs (taking advantage of EPL tax credits
which expired before year end), and an
increase in decommissioning activities.
In November, Harbour delivered first oil
from the Talbot project, a three-well subsea
tie-back to J-Area. The project was completed
on schedule, within budget and with no
recordable injuries, marking a material
milestone for Harbour. 2024 also saw a
return to drilling at the Britannia satellite
fields, bringing on-stream the Callanish
F6 infill well in July, while, at AELE, the
North West Seymour infill well came
on-stream in September. This well,
together with plant modifications, has
the potential to extend Armada’s field
life beyond 2030.
During 2024, Harbour successfully
appraised the Leverett gas discovery, made
an oil discovery at Gilderoy and a gas
discovery at Jocelyn South. Both Leverett
and Gilderoy are potential subsea tie-backs
to Greater Britannia while Jocelyn South,
which was drilled as a keeper well, will
be brought on-stream through the Judy
platform during Q1 2025.
Looking to 2025, production from the UK
is expected to be broadly similar to 2024,
with less maintenance downtime and
volumes from new wells and projects
substantially offsetting natural decline.
Unit operating costs are also expected to
be broadly similar. UK capital investment is
anticipated to be materially lower in 2025,
impacted by the deterioration in the fiscal
regime and with opportunities now needing
to compete across a broader portfolio.
The UK was Harbour’s largest producer in
2024, averaging 149 kboepd (2023: 175
kboepd). UK production was underpinned
by strong reservoir performance and high
operating efficiency across Harbour’s
operated Greater Britannia, AELE and
Tolmount hubs and new wells and projects
on-stream in the second half of the year.
Geographically diverse, with material positions in Norway,
the UK, Germany, Argentina, Mexico, North Africa and
Southeast Asia.
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Annual Report & Accounts 2024
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
OPERATIONAL REVIEW
CONTINUED
At Zama, FEED on the approved
development concept was substantially
completed in 2024. The Zama partners
are now in discussions with Pemex to
optimise the development concepts and
accelerate first oil. Approval of the Zama
development could result in the equivalent
of over a year’s worth of Group production
moving from resources into reserves.
To the southwest of Zama, appraisal
drilling was successfully completed at the
Harbour-operated Kan oil discovery. Work
to identify the optimum development
concept will be undertaken during 2025.
Through the Wintershall Dea transaction,
we expanded our asset base in Mexico,
adding production from the offshore Hokchi
and onshore Ogarrio oil fields, and an
increased stake in the offshore Zama and
Kan developments. Harbour also obtained
an interest in the offshore Polok and
Naajal discoveries.
Production in Mexico averaged 11 kboepd
from 3 September to 31 December,
contributing 4 kboepd to the Group’s 2024
production (2023: N/A). Unit operating costs
equated to $13.4/boe, while total capital
expenditure was $110 million, largely
reflecting Kan appraisal drilling, FEED at
Zama and Ogarrio development activities.
Harbour’s material 2C resource base in
Mexico’s offshore conventional oil fields
provides the company with significant
2P reserves replacement options.
10
kboepd
2024 production
65% liquids
$21.2/boe operating cost
126mmboe 2P reserves
43mmboe 2C resources
GUSTAVO BAQUERO
MANAGING DIRECTOR
MEXICO
Mexico
4
kboepd
2024 production
87% liquids
$13.4/boe operating cost
47mmboe 2P reserves
405mmboe 2C resources
Harbour is now one of the largest oil
and gas producers in Germany with a
significant operated position. Production
is both oil and gas and diversified across
three production hubs: Mittelplate,
Germany’s largest oil producing field,
Langwedel-Holtebüttel/Gas Nord which
includes the major Völkersen gas field,
and the Emlichheim heavy oil field.
CLAUDIA KROMBERG
MANAGING DIRECTOR
GERMANY
Germany
Production averaged 29 kboepd over
the period from 3 September 2024 to
31 December 2024, contributing 10 kboepd
to the Group’s full year production (2023: N/A).
This reflects a strong production efficiency from
the three hubs compensating for delays to
new wells and projects coming on-stream.
Most of Harbour’s operations in Germany
are electrified and, as a result, the Business
Unit has the lowest GHG emissions intensity,
on a gross operated basis, in Harbour.
Operating costs totalled $73.8 million for
the period 3 September to year end, which
equated to $21.2/boe. Total capital
expenditure was $70.3 million for the four
months, largely reflecting development
activities across the three production
hubs. This included the start up of a new
production well at Mittelplate in December,
and drilling of the Weißenmoor Z3 well in
Langwedel-Holtebüttel which is expected
on-stream in 2025. At Emlichheim, a new
desulphurisation unit, part of our hot water
development project, started at the end
of the year and the first new wells of the
project were successfully completed.
Production from Germany is expected to
be broadly stable in the near to medium
term, supported by ongoing infill drilling,
well intervention and workover activities
across the three production hubs.
28
Harbour Energy plc
Annual Report & Accounts 2024
93% gas
$4.8/boe operating cost
256mmboe 2P reserves
770mmboe 2C resources
year production (2023: N/A). This reflects a
continued strong performance from CMA-1,
which delivered c.70 per cent of our
production in the country. CMA-1 production
was supported by the Fénix gas project, a
new unmanned platform tied into existing
CMA-1 facilities, which came on-stream
ahead of schedule in September 2024.
Production from Aguada Pichana Este
averaged 18 kboepd for the period 3
September to 31 December 2024, mainly
from the unconventional Vaca Muerta
shale, with production constrained by
offtake and local market capacity. San
Roque production averaged 3 kboepd for
the period from the mature conventional
oil play. The unconventional Vaca Muerta
shale in the San Roque licence has been
appraised and discussions with partners
for the potential development of the
resource are ongoing.
Operating costs totalled $37million, for
the period 3 September to year end, which
equated to $4.8/boe. Total capital
expenditure amounted to $61 million for the
last four months of the year. This reflected
the drilling at Fénix, with production start-up
from the second and third development wells
initiated in December 2024, and an ongoing
multi-pad drilling campaign at Aguada Pichana
Este to sustain current production rates.
In Q4, Harbour signed a participation
agreement to acquire a 15 per cent
interest in Southern Energy SA which is
looking to develop a 2.45 mtpa FLNG
export project. The transaction completed
in January 2025. The proposed project
involves deploying Golar LNG’s existing
‘Hilli Episeyo’ FLNG vessel off the coast of
the Rio Negro province. It is anticipated
that the upstream partners in Southern
Energy will supply the natural gas for
the FLNG project, enabling Harbour’s
Argentina natural gas to access global
LNG export markets and international
natural gas prices. An application for the
project under the country’s recently
enacted RIGI legislation has been made;
if successful, the project will qualify for
certain investment incentives including
the ability to keep revenues offshore
after three years of production.
The progress at San Roque and Aguada
Pichana Este, along with participation in
Southern Energy, mark important steps
towards the unlocking of the full potential
of Harbour’s natural gas resources in
Argentina. With more than 750 mmboe of
2C resources, mainly in the Vaca Muerta
shale play, Argentina represents the
largest single component of Harbour’s 2C
resources and a significant reserve
replacement opportunity for the company.
21
kboepd
2024 production
As a result of the Wintershall Dea transaction,
Harbour holds a material non-operated
position in Argentina and is now one of the
country’s largest gas producers. Harbour’s
production is concentrated in two areas:
the prolific offshore Cuenca Marina Austral
(CMA-1) concession in the Tierra del Fuego
province, and the Aguada Pichana Este
and San Roque onshore concessions
in the Neuquén basin. Harbour’s acquired
business has been active in Argentina
for more than four decades and has a
long-term operator partnership through
TotalEnergies.
Production averaged 63 kboepd for the
period 3 September to 31 December 2024,
contributing 21 kboepd to the Group’s full
MARTIN RUEDA
MANAGING DIRECTOR
ARGENTINA
Argentina
29
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STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
OPERATIONAL REVIEW
CONTINUED
Production from North Africa averaged
35 kboepd for the period 3 September to
31 December 2024, contributing 12 kboepd
to the Group’s 2024 production (2023:
N/A). Egypt accounted for c.70 per cent of
the production, with contributions from the
bp-operated West Nile Delta, which includes
the Raven field, and the DISOUCO-operated
Greater Disouq Area gas fields. The balance
of North Africa production came from the
Reggane Nord onshore gas field in Algeria
and the offshore Al-Jurf oil field in Libya.
12
kboepd
2024 production
Harbour’s gas-weighted portfolio in North
Africa, acquired with the Wintershall Dea
transaction, comprises a material position
in Egypt along with interests in Algeria
and Libya. The position in Egypt makes
Harbour one of the critical suppliers
of gas into the Egyptian domestic market.
SAMEH SABRY
MANAGING DIRECTOR
MENA
North Africa
Unit operating costs equated to $5.4/boe.
Total capital expenditure amounted to
$46 million during the last four months
of the year. This largely related to the
drilling of two Raven West infill wells at
West Nile Delta, which are expected
on-stream mid-2025, and a drilling
campaign at Reggane Nord.
Harbour has operated production in Indonesia
and Vietnam and material organic growth
opportunities in Indonesia. In January 2025,
we announced the sale of our Vietnam
business for $84 million, which we expect
to complete during 2025.
Production averaged 11 kboepd (2023: 11
kboepd), split 5 kboepd from Indonesia and
6 kboepd from Vietnam. This reflected weaker
Singapore demand for our Indonesian gas
offset by strong reservoir performance from
Chim Sáo in Vietnam, supported by an active
well intervention and workover programme.
During 2024, Harbour successfully amended
its gas sales agreements with the Singapore
buyers of Natuna Sea Block A gas, increasing
the take-or-pay commitment under a tiered
pricing structure, enabling higher production
in the second half of 2024.
Unit operating costs were broadly stable at
$19.4/boe while capital expenditure was
higher at $101 million for the full year (2023:
$64 million), reflecting increased exploration
and appraisal drilling across our Andaman
Sea licences, offshore North Sumatra.
11
kboepd
2024 production
STEVE COX
MANAGING DIRECTOR
SOUTHEAST ASIA
Southeast Asia
In August, a multi-well exploration and
appraisal campaign across our Andaman
Sea acreage was completed, resulting in
material gas discoveries at Layaran and
Tangkulo on Andaman South (Harbour 20
per cent). In addition, Harbour secured
a 60 per cent operated interest in the
Central Andaman licence, which includes
an extension of the Layaran discovery.
Harbour and its partners are now
evaluating potential development options,
including an accelerated development at
Tangkulo. As at year end 2024, Harbour’s
2C resource for the Andaman area stood
at 143 mmboe.
At our operated Tuna project, the plan
of development was approved by the
Indonesian Government in December
2022. However, subsequent progress has
been impacted by EU/UK sanctions which
prevent us as operator from undertaking
further work on the project whilst our
Russian partner is on the licence. We
continue to work with our partner and
the Indonesian Government to find a
path forward for the project.
86% gas
$5.4/boe operating cost
52mmboe 2P reserves
30mmboe 2C resources
55% gas
$19.4/boe operating cost
14mmboe 2P reserves
211mmboe 2C resources
30
Harbour Energy plc
Annual Report & Accounts 2024
659
mt
Net CO
2
storage resources
GRAEME DAVIES
EVP CCS
Carbon capture and storage (CCS)
Development Consent Order (DCO) for the
proposed new onshore CO
2
pipeline. The
Viking DCO was submitted to the Secretary
of State for approval in December 2024.
Viking aims to transport and store up to
15 mtpa of CO
2
by 2035. Its gross storage
resource increased to 417 million tonnes
(2023: 300 million tonnes) as at year end
2024. This follows the addition of the
storage resources of two new CCS licences
in Viking’s vicinity awarded in 2023.
The UK Government remains committed to
supporting CCS, confirming over £21 billion
of funding for two ‘Track 1’ projects in 2024.
Whilst a welcome signal, the pace of decision-
making for additional project funding has
been slowed by the change of government.
Further progress on Track 2 projects
(including Viking) is anticipated following the
conclusion of the UK Government’s Critical
Spending Review in 2025. In the meantime,
spending on the Viking project has been
slowed, awaiting the necessary progress
from the UK Government.
In December 2024, Harbour together with
its partners announced a final investment
decision for the Greensand Future project,
marking Harbour’s and Denmark’s first CCS
project to reach FID. Greensand Future is a
small, short cycle project with commercial
returns, in part driven by the ability to
reuse existing infrastructure and defer
decommissioning at the Nini field.
The project has been awarded an EU
Innovation Fund Grant and is targeting first
injection from 2026. Harbour also has an
interest in the cost-advantaged, onshore
Greenstore CCS project in Denmark, which
is being progressed through the appraisal
work programme.
In Norway, Harbour was awarded an
operated interest in the Kaupang CCS
licence, alongside partner Equinor,
in December.
Harbour is progressing with early-stage
engineering and concept studies for the
development of CO
2
transportation hubs
at Wilhelmshaven in Germany, together
with partner HES International, and at
Immingham in the UK, with Associated
British Ports.
Harbour continues to actively manage
its CCS portfolio to ensure capital
and resources are focused on its most
advantaged projects. In line with this, in
2024, Harbour announced its planned
exit from the Camelot CCS project in
the UK.
SUSTAINABILITY REVIEW
READ MORE ON PAGE 51
Photo credit: INEOS Energy.
Harbour is seeking to build a competitive
CCS business with long-term cash flow
potential. 2024 saw significant progress
in this respect. We continued to mature
our operated Viking project in the UK
towards a potential final investment
decision (FID) while the Wintershall Dea
acquisition strengthened our pipeline of
potential projects, adding CO
2
storage
licences in Denmark, Norway and the UK.
Located close to the UK’s most industrial
and emissions-intensive region, with the
ability to reuse existing infrastructure
and a robust and scalable CO
2
storage
system close to European markets, Viking
is a strategically and cost-advantaged
project. Progress during 2024 included
substantially completing FEED, completing
the inspection of the 30 million tonnes
per annum capacity LOGGS pipeline, and
completing the examination phase of the
Leading European CO
2
storage position
7 licences across the UK, Denmark and Norway
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
FINANCIAL REVIEW
Summary of financial results
Units
2024
2023
As restated
1
Production and post-hedging realised prices
Production
kboepd
258
186
Crude oil
$/boe
82
78
European gas
2
$/mscf
11
7
Other gas
2
$/mscf
4
13
Income statement
Revenue and other income
$ million
6,226
3,751
EBITDAX
3
$ million
4,006
2,675
Profit before taxation
$ million
1,219
616
(Loss)/profit after taxation
$ million
(93)
45
Basic (loss)/earnings per ordinary
voting share
cents/share
(10)
6
Other financial key figures
Total capital expenditure
3
$ million
1,828
969
Operating cash flow
$ million
1,615
2,150
Free cash flow
3
$ million
(118)
1,048
Shareholder returns paid
3
$ million
199
439
Net debt
3
$ million
4,424
207
Leverage ratio
3
times
1.1
0.1
1
2023 results throughout this Financial review have been restated with respect to the Vietnam
asset held for sale classification given the previous sales process did not conclude.
2
2024 reflects the impact of the Wintershall Dea portfolio. Europe includes UK, Norway
and Germany with 2023 comparative restated to $/mscf. For Other gas, the 2023
comparative relates solely to the Indonesia business.
3
See Glossary for the definition of non-IFRS measures. Reconciliations between IFRS
and non-IFRS measures are provided within this Financial review.
Looking ahead,
our financial position
remains strong
Income statement
2024
$ million
2023
$ million
As restated
Revenue and other income
6,226
3,751
Cost of operations
(3,613)
(2,376)
EBITDAX
1
4,006
2,675
Operating profit
1,648
932
Profit before tax
1,219
616
Taxation
(1,312)
(571)
(Loss)/profit after tax
(93)
45
Cents/share
Cents/share
As restated
Basic (loss)/earnings per ordinary voting share
(10)
6
1
Non-IFRS measure – see Glossary for the definition.
Revenue and other income
Total revenue and other income increased to $6,226 million (2023:
$3,751 million). This was driven by higher production, primarily due
to the Wintershall Dea transaction with the newly acquired portfolio
contributing $2,021 million in the four months post completion,
and increased commodity prices, especially European natural gas.
2024
$ million
2023
$ million
Revenue and other income
6,226
3,751
Crude oil
2,878
2,086
Gas
2,936
1,415
Condensate
283
179
Tariff income and other revenue
61
35
Other income
68
36
32
Harbour Energy plc
Annual Report & Accounts 2024
Revenue earned from hydrocarbon production activities increased to
$6,097 million (2023: $3,680 million) after realised hedging losses of
$18 million (2023: $911 million). This increase was mainly driven by
higher production due to the acquired portfolio and higher post-hedging
realised European natural gas prices. Of Harbour’s total annual
production of 258 kboepd and revenue of $6,226 million, 98 kboepd
and $2,021 million revenue was delivered by the acquired portfolio
in the four months post completion.
Crude oil sales increased to $2,878 million (2023: $2,086 million)
after realised hedging gains of $32 million (2023: losses of $93
million). This was driven by higher production volumes from the
acquired portfolio as well as a higher realised post-hedging oil price
of $82/bbl (2023: $78/bbl). Of Harbour’s total annual crude oil
production of 90 kboepd and total $2,878 million post-hedging
crude oil revenue, 27 kboepd and $590 million was delivered by
the acquired portfolio in the four months post completion.
Gas revenue was $2,936 million (2023: $1,415 million), split between
European gas revenue of $2,644 million (2023: $1,284 million) including
realised hedging losses of $50 million (2023: $818 million) and other
gas revenue of $292 million (2023: $131 million). The increase in both
categories is primarily due to the acquired portfolio. Of Harbour’s total
annual gas production of 149 kboepd, 67 kboepd was delivered by the
acquired portfolio in the four months post completion with associated
European and Other post-hedging gas revenue of $1,121 million and
$174 million respectively. The realised post-hedging price for our
European and other gas was $11/mscf (2023: $7/mscf) and $4/mscf
(2023: $13/mscf), respectively. The fall in the realised other gas
price reflects the lower price environments of the acquired portfolio.
Condensate revenue was $283 million (2023: $179 million)
and tariff income $61 million (2023: $35 million). Other income
amounted to $68 million (2023: $36 million) which includes partner
recovery on lease obligations and government subsidies in Argentina.
Cost of operations
Cost of operations increased to $3,613 million (2023: $2,376 million,
as restated) driven primarily by costs associated with the acquired
assets and a negative movement in hydrocarbon inventories and over/
underlift. Cost of operations includes operating costs of $1,612 million
(2023: $1,171 million) and depreciation, depletion and amortisation
expense of $1,704 million (2023: $1,414 million, as restated) as
discussed below along with over/underlift movements and other
items for an expense of $297 million (2023: $209 million, credit).
2024
$ million
2023
$ million
As restated
Operating costs
Field operating costs
1,612
1,171
Non-cash depreciation on non-oil and gas assets
(25)
(26)
Tariff income
(32)
(30)
Total operating costs
1,555
1,115
Operating costs per barrel ($ per barrel)
1
16.5
16.4
Movement in over/underlift balances
and hydrocarbon inventories
201
(225)
Depreciation, depletion and amortisation (DD&A)
before impairment charges
Depreciation of oil and gas properties
1,704
1,414
Depreciation of non-oil and gas properties
22
12
Amortisation of intangible assets
19
23
Total DD&A
1,745
1,449
DD&A before impairment charges ($ per barrel)
1
18.5
21.3
1
Non-IFRS measure – see Glossary for the definition.
Total operating costs increased to $1,555 million (2023: $1,115
million) driven by the four-month contribution of the acquired
portfolio. However, they were materially unchanged on a unit of
production basis at $16.5/boe (2023: $16.4/boe).
Depreciation, depletion and amortisation unit expense, which reflects
the capitalised costs of producing assets divided by produced
volumes, decreased to $18.5/boe (2023: $21.3/boe, as restated).
General and administrative expenses
General and administrative expenses amounted to $352 million
(2023: $149 million). The increase was driven by the enlarged
group, including expansion of our corporate centre, and additional
and one-off M&A transaction costs of $119 million (2023: $33
million) associated with the Wintershall Dea acquisition.
EBITDAX
1
EBITDAX
1
was $4,006 million (2023: $2,675 million, as restated),
with the increase driven by the four-month contribution of the
acquired assets.
2024
$ million
2023
$ million
As restated
Operating profit
1,648
932
Depreciation, depletion and amortisation
1,745
1,449
Impairment of property, plant and equipment
352
176
Impairment of right-of-use asset
20
Impairment of goodwill
25
Exploration and evaluation expenditure, and new ventures
68
36
Exploration costs written-off
173
57
EBITDAX
1
4,006
2,675
1
Non-IFRS measure – see Glossary for the definition.
The Group has recognised a net pre-tax impairment charge on
property, plant and equipment of $352 million (2023: $176 million,
as restated). Of this, $174 million was in respect of revisions to
decommissioning estimates on mainly non-producing assets with no
remaining book value. The remainder largely relates to impairments
on three fields in the UK due to impacts from further changes to
the UK Energy Profits Levy (EPL) and changes in life of field outlook.
During the year, the Group expensed $241 million (2023:
$93 million) of exploration and appraisal activities. This covers
exploration write-off expense of $173 million (2023: $57 million)
including write-off of costs associated with projects in the UK
($79 million) and licence relinquishments in Norway ($64 million),
and $40 million (2023: $29 million) costs primarily associated
with carbon capture and storage activities.
Net financing costs
Finance income amounted to $173 million (2023: $104 million).
The increase compared to 2023 is primarily due to unrealised
foreign exchange gains of $118 million during the year which
predominantly arose on the revaluation of the Group’s tax liabilities
due to the strengthening of the US dollar in the year.
33
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
FINANCIAL REVIEW
CONTINUED
Statement of financial position
2024
$ million
2023
$ million
As restated
Assets
Goodwill
5,147
1,302
Non-current assets, excluding goodwill and deferred taxes
21,133
7,061
Deferred tax assets
130
7
Current assets
3,634
1,546
Assets held for sale
277
Total assets
30,321
9,916
Liabilities and equity
Borrowings net of transaction fees
5,229
509
Provisions
7,521
4,135
Deferred tax liabilities
6,221
1,297
Lease creditor
792
768
Derivative liabilities
826
284
Other liabilities
3,248
1,370
Liabilities directly associated with assets held for sale
233
Total liabilities
24,070
8,363
Equity
6,251
1,553
Total liabilities and equity
30,321
9,916
Net debt
4,424
207
Assets
The increase in total assets of $20,405 million to $30,321 million
(2023: $9,916 million, as restated) is mainly as a result of the
acquisition, primarily property, plant and equipment of $10,011
million, exploration, evaluation and other intangible assets of $4,409
million and goodwill arising from purchase price allocation exercise
of $3,845 million. Total assets include assets held for sale in
respect of the Vietnam disposal of $277 million.
The goodwill of $3,845 million arises principally from the requirement
to recognise undiscounted deferred tax liabilities for the difference
between the fair value and the tax base of the acquired assets and
liabilities assumed in the business combination. This goodwill will
ultimately be charged to the income statement over time as an
impairment charge, primarily as the deferred tax balances unwind.
Liabilities
The increase in total liabilities of $15,707 million to $24,070 million
(2023: $8,363 million, as restated) is primarily driven by the
recognition of the liabilities assumed as a result of the acquisition.
Liabilities assumed included deferred tax liabilities of $5,500 million,
borrowings net of transaction fees of $3,079 million, provisions
of $2,940 million, trade and other payables of $1,159 million and
current tax liabilities of $1,128 million. Additionally, the Group
increased its borrowings by $1,914 million being $250 million drawn
under the $3 billion revolving credit facility (RCF) and new issue of
Euro-denominated bonds of $1,664 million (nominal €1,600 million).
Total liabilities included liabilities directly associated with assets held
for sale in respect of the Vietnam disposal of $233 million.
Finance expenses amounted to $602 million (2023: $420 million).
This included:
interest expense incurred of $78 million (2023: $42 million)
related to debt facilities and bonds;
bank and financing fees of $139 million (2023: $100 million);
unwinding of the discount on decommissioning provisions
of $221 million (2023: $156 million) which increased due
to the acquired assets and increased estimates in the UK;
$53 million (2023: $51 million) of lease interest;
$43 million related to changes in the fair value of foreign
exchange derivatives (2023: $nil); and
realised losses on foreign exchange forward contracts
$71 million (2023: $9 million, gain).
Earnings and taxation
Loss after tax amounted to $93 million (2023: $45 million profit,
as restated). This resulted in a loss per ordinary voting share of
10 cents (2023: 6 cents, earnings, as restated) after taking into
account the weighted average number of ordinary voting shares in
issue of 990 million (2023: 804 million) following the issue of shares
to BASF and LetterOne as part of the acquisition. After taking into
consideration $15 million (2023: $nil) attributable to subordinated
notes investors, loss after tax attributable to equity owners of the
company amounted to $108 million (2023: $45 million gain
attributable to equity owners of the company).
Harbour’s tax expense increased to $1,312 million in 2024 (2023:
$571 million, as restated), primarily driven by higher pre-tax profits
resulting from the additional earnings contributed by the acquisition and
specific UK adjustments due to the EPL. The tax expense comprises
a current tax expense of $1,415 million (2023: $677 million) and
a deferred tax credit of $103 million (2023: $106 million, credit).
The effective tax rate of 108 per cent (2023: 93 per cent, as restated)
is materially higher than the statutory tax rate of 78 per cent (2023:
75 per cent). This is primarily due to several UK-specific exceptional
items. Key contributors include the increase in UK decommissioning
obligations in the period (15 per cent), the impairment of tangible and
intangible assets in the UK (4 per cent) and the increase in the EPL
rate from 35 per cent to 38 per cent (6 per cent).
Shareholder distributions
A final dividend with respect to 2023 of 13.00 cents per ordinary
share was proposed on 7 March 2024 and approved by shareholders
at the AGM on 9 May 2024. The dividend was paid on 22 May 2024
to all shareholders on the register as at 12 April 2024, totalling $100
million. An interim dividend was announced on 8 August 2024 at
13 cents per share and was paid on 25 September 2024 at a value
of $99 million.
1
The Board is proposing a final dividend with respect to 2024 of 13.19
cents per voting ordinary share to be paid in pound sterling at the spot
rate prevailing on the record date. This dividend is subject to shareholder
approval at the AGM, to be held on 8 May 2025. If approved, the
dividend will be paid on 21 May 2025 to shareholders as of 11 April
2025. The ex-dividend date is 10 April 2025. A dividend reinvestment
plan (DRIP) is available to shareholders who would prefer to invest
their dividends in the shares of the company. The last date to elect
for the DRIP in respect of this dividend is 29 April 2025.
A DRIP is provided by Equiniti Financial Services Limited. The DRIP
enables the company’s shareholders to elect to have their cash
dividend payments used to purchase the company’s shares.
More information can be found at shareview.co.uk/info/drip.
1
Difference to the final dividend value declared of $100 million is due to foreign exchange adjustments on sterling denominated shares at the date of payment.
34
Harbour Energy plc
Annual Report & Accounts 2024
Derivative financial instruments
We carry out hedging activity to manage commodity price risk. We
have entered into both a series of fixed-price sales agreements and
a financial hedging programme for both oil and gas, consisting of
swap and option instruments. Hedges realised to date are in respect
of both crude oil and natural gas.
The current hedging programme is shown below:
Hedge position
2025
2026
2027
Oil
Total oil volume hedged (thousand bbls)
16,162
12,881
– of which swaps
15,598
12,881
– of which zero cost collars
564
Weighted average fixed price ($/bbl)
76.47
72.88
Weighted average collar floor and cap ($/bbl)
60.00-86.78
Natural gas
Gas volume hedged (thousand boe)
33,509
19,924
2,056
– of which swaps/fixed price forward sales
26,912
16,817
2,056
– of which zero cost collars
6,597
3,106
Weighted average fixed price ($/mscf)
12.91
10.79
11.29
Weighted average collar floor and cap ($/mscf)
11.46-22.50
9.04-16.71
As at 31 December 2024, our financial hedging programme
on commodity derivative instruments showed a pre-tax negative
mark-to-market fair value of $476 million (2023: $18 million).
Most of the commodity derivatives were designated as cash flow
hedges, therefore, changes in fair value were reported in other
comprehensive income.
For foreign exchange derivative instruments, the pre-tax negative
mark-to-market fair value was $198 million (2023: $nil). Of this
value, $173 million related to the 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. The remaining $25 million related to FX forward contracts
designated as fair value through income statement.
Acquisition of the Wintershall Dea assets
On 3 September 2024, the Group closed the transaction to acquire
substantially all of Wintershall Dea’s upstream assets from BASF and
LetterOne, including those in Norway, Germany, Denmark, Argentina,
Mexico, Egypt, Libya and Algeria as well as Wintershall Dea’s CCS
licences in Europe.
The net deferred tax position on the statement of financial position
is a liability of $6,091 million (2023: $1,290 million, as restated).
This is primarily made up of a deferred tax liability in respect of the
future profits which will flow from our property, plant and equipment
of $9,600 million offset by a deferred tax asset in respect of future
tax relief on decommissioning spend of $2,791 million, fair value
losses on derivatives of $336 million and tax losses of $288 million
(before adjustment for assets held for sale).
Equity and reserves
Total equity increased by $4,698 million to $6,251 million (2023:
$1,553 million, as restated) mainly due to the recognition of merger
reserve of $3,457 million associated with the 921 million shares
issued to BASF and LetterOne as part of the acquisition as well as
the recognition of subordinated notes that were assumed as part
of the acquisition of $1,548 million. Movements in equity also
included unfavourable post-tax fair value movements on cash flow
hedges of $166 million (2023: favourable of $792 million) and gains
on currency translation of $130 million (2023: $103 million) all
recognised in other comprehensive income. Equity was reduced
by dividend payments of $199 million (2023: $190 million) in
addition to the loss for the year.
Net debt
As at 31 December 2024, net debt of $4,424 million (2023:
$207 million, as restated). This consisted of borrowings amounting
to $5,512 million (2023: $500 million) less unamortised fees of
$283 million (2023: $7 million) less cash balances of $805 million
(2023: $286 million, as restated). During the year the RBL facility
was replaced by the RCF and, as at 31 December 2024, $250 million
was outstanding. At the end of 2023 the drawdown in the RBL was
$nil and there were $61 million of unamortised fees classified in
debtors which were expensed in 2024. As part of the acquisition,
$3,079 million worth of borrowings were assumed, and a $1,500
million bridge facility was used to complete the acquisition. This was
subsequently refinanced into two Euro-denominated bonds amounting
to $1,664 million (€900 million and €700 million, respectively). In
addition, Harbour had surety bonds of $675 million (£540 million)
at year end which provide cover for decommissioning securities.
Available liquidity, comprising undrawn portion of the RCF facility
of $1.9 billion ($250 million debt and $0.9 billion letters of credit
for decommissioning have been drawn) plus cash balances of
$0.8 billion (2023: $0.3 billion), was $2.7 billion (2023: $1.6 billion)
at the end of the year.
As at 31 December 2024, the leverage ratio
1
was 1.1x (2023: 0.1x)
which has increased primarily as a result of the significant increase
in net debt due to the acquisition, as well as only four months of
EBITDAX contribution from the acquired portfolio. The balance sheet
is in a strong position supported by the RCF facility and investment
grade credit ratings.
2024
$ million
2023
$ million
As restated
Leverage ratio
Net debt
1
4,424
207
EBITDAX
1
4,006
2,675
Leverage ratio
1
1.1x
0.1x
1
Non-IFRS measure – see Glossary for the definition.
35
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
FINANCIAL REVIEW
CONTINUED
Net operating cash flow before tax was $3,114 million (2023:
$2,588 million, as restated) reflecting the enlarged group. The timing
and magnitude of tax payments impacted net cash from operating
activities after tax which amounted to $1,615 million (2023:
$2,150 million, as restated). Tax payments during the year were
$1,499 million compared to $438 million in 2023 due to the
enlarged portfolio and balancing payments for prior year UK EPL.
UK EPL payments amounted to $732 million (2023: $402 million).
Cash flow working capital movements were negative $494 million
(2023: positive $205 million) as the increase in production within
the enlarged business coupled with overdue receivables in Egypt
and Mexico means we carry a materially higher net working capital
position on our balance sheet at year end.
Capital investment was $1,322 million (2023: $718 million) which
included property, plant and equipment additions of $884 million
(2023: $496 million), exploration and evaluation additions of
$359 million (2023: $202 million) and other intangible additions
of $79 million (2023: $20 million). Cash outflow from financing
activities totalled $500 million (2023: $409 million) split between
interest payments of $181 million (2023: $150 million) and lease
payments of $319 million (2023: $259 million).
Free cash flow was $118 million outflow after acquisition related
costs of $235 million. Before these acquisition related costs free
cash flow was $117 million inflow.
Shareholder distributions consist of dividends paid of $199 million
(2023: $190 million). In 2023, shareholder distributions also included
$249 million related to the repurchase of Harbour’s own shares.
Cash and cash equivalent balances were $805 million (2023:
$286 million, as restated) at the end of the year.
Capital investment is defined as additions to property, plant and
equipment, fixtures and fittings and intangible exploration and
evaluation assets, excluding changes to decommissioning assets.
2024
$ million
2023
$ million
As restated
Additions to oil and gas assets
(1,037)
(482)
Additions to fixtures and fittings, office equipment
and IT software
(73)
(29)
Additions to exploration and evaluation assets
(398)
(210)
Additions to other intangible assets
(36)
Total capital investment
1
(1,544)
(721)
Movements in working capital
140
(22)
Capitalised interest
18
7
Capitalised lease payments
64
18
Cash capital investment per the cash flow statement
(1,322)
(718)
1
Non-IFRS measure – see Glossary for the definition.
During the period, the Group incurred total capital expenditure of
$1,828 million (2023: $989 million), split by capital investment
$1,544 million (2023: $721 million) and decommissioning spend
$284 million (2023: $268 million) respectively.
The capital investment for operated assets mainly consisted of: in
the UK, project activity at Talbot (J-Area) and development drilling at
J-Area, Callanish F6 (GBA), Greater Britannia appraisal at Leverett
and discoveries at Gilderoy and Jocelyn South and North West
Seymour (AELE); in Norway, multiple tie-back projects at Maria, Dvalin
North, Irpa, Alva Nord and Idun North plus Solveig; in Germany,
continued development of the Mittelplate field; and in Mexico, the
Kan-2 appraisal well.
Under the purchase price allocation that was performed, the fair
values of identifiable assets and liabilities of Wintershall Dea, and
resulting goodwill, are as follows:
Fair value
recognised on
acquisition
$ million
Assets
Other intangible assets
4,409
Property, plant and equipment
10,011
Right-of-use assets
106
Deferred tax assets
147
Other assets, excluding cash and cash equivalents
1,814
Cash and cash equivalents
748
Total assets
17,235
Liabilities
Borrowings
3,079
Provisions
2,940
Deferred tax liabilities
5,500
Lease creditor
118
Derivative liabilities
317
Other liabilities
2,287
Total liabilities
14,241
Fair value of net identifiable net assets acquired
2,994
Subordinated notes measured at fair value
(1,548)
Goodwill arising on acquisition
3,845
Purchase consideration transferred
5,291
The goodwill of $3,845 million arises principally from the requirement
to recognise undiscounted deferred tax liabilities for the difference
between the fair value and the tax base of the acquired assets and
liabilities assumed in the business combination. This goodwill will
ultimately be charged to the income statement over time as an
impairment charge, primarily as the deferred tax balances unwind.
From the date of acquisition, the acquired assets contributed $2,021
million of revenue and $867 million to profit before tax from continuing
operations of the Group. If the combination had taken place at the
beginning of the year, revenue from continuing operations would have
been $10,516 million and profit before tax from continuing operations
for the Group would have been $3,017 million.
Statement of cash flows
1
2024
$ million
2023
$ million
As restated
Cash flow from operating activities before tax payments
3,114
2,588
Tax payments
(1,499)
(438)
Cash flow from operating activities after tax payments
1,615
2,150
Cash flow from investing activities – capital investment
(1,322)
(718)
Cash flow from investing activities – other
2
89
25
Operating cash flow after investing activities
382
1,457
Cash flow from financing activities
3
(500)
(409)
Free cash flow
4
(118)
1,048
Cash and cash equivalents
805
286
1
Table excludes financing activities related to debt principal movements.
2
Excludes net expenditure on business combinations of ($1,044 million, note 14 of the
financial statements).
3
Interest and lease interest and capital payments only, excludes shareholder distributions.
4
Non-IFRS measure – see Glossary for the definition.
36
Harbour Energy plc
Annual Report & Accounts 2024
The base case indicates that the Group is able to operate as a going
concern with sufficient headroom and remain in compliance with its
loan covenants throughout the assessment period.
The Group’s going concern assessment is based on management’s
best estimate of forward commodity price curves and other economic
assumptions, production and expenditure in line with approved asset
base case, plus the ongoing capital requirements of the Group that
will be financed by free cash flow, the existing RCF and bond
financing arrangements.
In line with the principal risks that have been identified to impact
the financial capability of the Group to operate as going concern,
a single downside sensitivity scenario has been prepared reflecting
a reduction in:
Brent crude, UK natural gas and European TTF gas prices
of 20 per cent; and
the Group’s unhedged production of 10 per cent;
throughout the entire assessment period. Management considers
this represents a severe but plausible downside scenario
appropriate for assessing going concern and viability.
In this downside scenario when applied individually and in aggregate
to the base case forecast, the Group is forecast to have sufficient
liquidity headroom throughout the assessment period and to remain
in compliance with its financial covenants.
Reverse stress tests have been prepared reflecting reductions in
each of commodity price and production parameters, prior to any
mitigation strategies, to determine at what levels each would need
to reach such that either the lending covenants are breached or
liquidity headroom runs out. The results of these reverse stress
tests demonstrated the likelihood that a sustained significant fall
in commodity prices or a significant fall in production over the
assessment period that would be required to cause a risk of funds
shortfall or a covenant breach is remote.
Taking the above analysis into account and considering the findings
of the work performed to support the statement on the long-term
viability of the company and the Group, the Board was satisfied
that, for the going concern assessment period, the Group is able to
maintain adequate liquidity and comply with its lending covenants
up to 31 December 2026 and has therefore adopted the going
concern basis for preparing the financial statements.
For further information on the work performed on the long-term
viability of the company and the Group refer to page 63.
By order of the Board,
Alexander Krane
Chief Financial Officer
For partner-operated assets, capital investment consisted primarily of:
in the UK, drilling at Buzzard, Clair and Schiehallion; in Norway, drilling
continued at Skarv and Njord; in Argentina, the offshore Fénix field
development was completed; and in Egypt, drilling continued on the
Raven West field infill wells. In Indonesia exploration and appraisal
wells were drilled at Layaran and Tangkulo in South Andaman.
Refer to the Operational review for more detail.
Principal risks
The directors have identified several changes to the principal risks
facing the company over the period, primarily as a result of how
the Wintershall Dea transaction has diversified the portfolio and
strengthened the financial position of the business. Notably, the
principal risk recognised in the 2023 Annual Report as ‘Access to
capital’ has been broadened to ‘Financial discipline’ to encompass
broader aspects of the financial management and control, while
the unmitigated risk level of several principal risks has increased.
A full description of Harbour’s principal risks can be found on
pages 64 to 69.
Post balance sheet events
On 23 January 2025 Harbour announced it had signed a Sale and
Purchase Agreement to sell its Vietnam business, which includes the
53.125 per cent equity interest in the Chim Sáo and Dua production
fields, to EnQuest for $84 million. The effective date is 1 January
2024 with completion targeted during 2025. This agreement
resulted in the Vietnam business unit being classed as asset
held for sale as at 31 December 2024.
On 3 March 2025, the Finance Act 2025 was substantively enacted
following its third reading in the UK Parliament. While the substantive
enactment has no implications for the current accounting period,
it confirms that the extension of the Energy Profits Levy to 31 March
2030 will be reflected in the Group’s results for the interim period
to 30 June 2025. If the Finance Act 2025 had been substantively
enacted at the balance sheet date, the deferred tax liability at the
end of the period would have increased by $306 million (further
details are provided in note 8 of the financial statements).
Going concern
The directors considered the going concern assessment period to
be up to 31 December 2026. The Group monitors and manages its
capital position and its liquidity risk regularly to ensure that it has
access to sufficient funds to meet forecast cash requirements. Cash
forecasts for management are regularly produced and sensitivities
considered based on, but not limited to, the Group’s latest life of field
production and expenditure forecasts, management’s best estimate of
future commodity prices based on recent forward curves, adjusted for
the Group’s hedging programme and the Group’s borrowing facilities.
The Group’s ongoing capital requirements are financed by its $3.0
billion revolving credit facility (RCF), bonds and subordinated notes
of $1.6 billion, and surety bonds of $675 million (£540 million) which
provide cover for decommissioning securities. The RCF is subject to
financial covenants that require the ratio of consolidated total net
debt, including letters of credit, to last twelve months (LTM) EBITDAX
to be less than 3.5x and LTM EBITDA divided by interest expense to
exceed 3.5x. Under the Group’s base case, the RCF is forecast to
have an undrawn balance of $3.0 billion through 2025 and 2026.
When combined with drawn letters of credit and unrestricted cash
the headroom is forecasted to be $2.5 billion in 2026 which
provides a robust liquidity position.
37
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
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Reducing our impact on the environment
Environmental management underpins
our operating model and guides our activities
• We work actively to reduce emissions from
our operations
• We are investing in CO
2
storage and have
a leading position in Europe
• Our plans, procedures and decisions take
into account the impact our activities may
have on the environment
Supporting our stakeholders
Respectful, fair and transparent with our
employees, communities in which we work,
investors and other stakeholders
• We respect human rights, upholding the
highest ethical and governance standards
to maintain the trust of our stakeholders
• We help our communities prosper and drive
responsible practices in our supply chain
• We promote diversity, equity and inclusion
Prioritising safety
Committed to the safety and wellbeing
of everyone who works with Harbour
• We promote a culture of safety
and wellbeing
• We have comprehensive health and
safety processes and procedures
• We focus on continuous improvement
and are working towards the goal of
zero incidents
Our approach is aligned with the UN Sustainable Development Goals (SDGs). Our primary SDGs are:
SUSTAINABILITY REVIEW
Our sustainability approach
Our purpose is to play a significant role in meeting the world’s energy needs through
the safe, efficient and responsible production of hydrocarbons, while creating value
for our stakeholders. In support of this, we are guided by our approach to sustainability.
PRIORITISING SAFETY
PAGE 40
Material topics
• Occupational health and safety
• Process safety
• Emergency preparedness and crisis management
• Security
• Cyber security
SUPPORTING OUR
STAKEHOLDERS
PAGE 54
Material topics
• Governance and business ethics
• Supply chain management
• Human rights
• Local communities
• Employment practices and
diversity, equity and inclusion
REDUCING OUR IMPACT
ON THE ENVIRONMENT
PAGE 44
Material topics
• Climate change and the energy
transition
• Energy use and GHG emissions
• Effluents, spills and waste
• Biodiversity
• Decommissioning
OUR SUSTAINABILITY REPORTING FRAMEWORK
38
Harbour Energy plc
Annual Report & Accounts 2024
How we report
Materiality assessment
We conduct materiality assessments to
help us identify and evaluate the topics
that matter most to our business and our
stakeholders. This informs our sustainability
approach and our environmental, social
and governance reporting.
To determine our material issues, we review
the latest regulatory and sustainability
frameworks and engage with a range of
internal and external stakeholders. We
finalise the list of material topics through
discussion with our senior leadership.
In 2024, we conducted a double materiality
assessment (DMA), informed by the
approach in the European Sustainability
Reporting Standards (ESRS), to help
us prepare for the upcoming Corporate
Sustainability Reporting Directive.
The assessment included input from our
newly acquired Wintershall Dea Business
Units as well as our existing operations.
It confirmed that the material topics identified
in 2023 continued to be material in 2024.
For this reporting year (1 January to
31 December 2024), we will continue
to use the topic classifications adopted
in our 2023 report. We will align our
future reporting to the DMA topics and
classifications under the ESRS standards
as part of the 2025 reporting cycle.
About our data
We align our reporting with recognised
international reporting frameworks and
sustainability initiatives, including:
Global Reporting Initiative 2021
and the Oil and Gas supplement;
Task Force on Climate-related Financial
Disclosures recommendations;
Sustainability Accounting Standards
Board Oil & Gas Exploration and
Production standard;
CDP (formerly known as the Carbon
Disclosure Project);
United Nations SDGs; and
United Nations Global Compact.
All environmental and safety data in
this section of the report, unless noted
otherwise, relates to the performance
and activities of our Harbour-operated
assets, and is reported on a 100 per
cent basis regardless of our ownership
interest in each asset. On 3 September
2024, Harbour Energy completed the
Wintershall Dea transaction. The report
therefore covers activities from 1 January
to 31 December for the legacy Harbour
assets, with the Wintershall Dea assets
contributing from completion of the
acquisition unless otherwise stated.
Sustainability governance
We seek to embed sustainability
into our governance, risk management
and decision-making. To ensure the
effectiveness of our sustainability
management, regular reviews are
conducted by the Board, the Board’s
Health, Safety, Environment and
Security (HSES) Committee and the
Leadership Team. We use various
assurance mechanisms, including
internal and external audits, and
participate in external performance
ratings, to evaluate our progress
and drive continuous improvement.
In 2024, we expanded our Leadership
Team to strengthen executive oversight of
the company and broadened our corporate
functions to support the delivery of our
sustainability priorities across a larger and
more geographically diverse organisation.
This included the recruitment of employees
with specialised skills and knowledge from
Wintershall Dea’s corporate centre. These
welcome additions to Harbour Energy
also helped enable the safe and smooth
transfer of operations upon completion
of the acquisition.
Looking ahead, we will continue to
review and update the policies and
standards that govern our operations
and sustainability activities. These cover
multiple areas, including our core HSES
documents, management systems and
tools, our human resources programmes
and processes, and our approach towards
human rights and community investment.
Our policies and standards set out our
minimum performance expectations
across our global operations, while
allowing the Business Units to adapt
procedures to reflect their local activities,
conditions and cultures.
39
STRATEGIC REPORT
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Annual Report & Accounts 2024
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0.8
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0.7
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2
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1
1
4
0
SUSTAINABILITY REVIEW
CONTINUED
Ensuring our people are kept
safe and achieving process
safety excellence are our
primary goals.
Total recordable injury rate (TRIR)
per million hours worked
Process safety events
number of Tier 1 & 2 events
OTHER RELEVANT PAGES
HSES COMMITTEE REPORT
PAGE 86
CHIEF EXECUTIVE OFFICER’S STATEMENT
PAGE 7
Focus areas in 2024
Reduce risks and ensure the safety
and security of our personnel
Embed process safety thinking into
our day-to-day activities
Maintain our emergency response
capability
Track leading and lagging personal
and process safety metrics to drive
continuous improvement
Nothing is more important than the
health and safety of our people.
The acquisition of the Wintershall Dea
assets brought significant
organisational change, and I am
proud that we accomplished this
safely and with minimal disruption.
Looking ahead, we will continue to
embed our strong safety culture
as we further integrate the portfolio.
ALAN BRUCE
EVP TECHNICAL SERVICES
PRIORITISING
SAFETY
1
One Tier 2 event.
2
One Tier 1 event and three Tier 2 events.
1
Tier 1 process safety event
(2023: Zero)
13.7
million hours worked
(2023: 10.2)
40
Harbour Energy plc
Annual Report & Accounts 2024
Given the potential hazards associated
with oil and gas operations, we apply
rigorous process safety, asset integrity and
occupational health and safety practices.
Our health, safety, environment and security
(HSES) policy is implemented through our
business management system and our
HSES management system standard. These
provide universal standards and procedures
that aim to minimise the likelihood and
severity of safety incidents.
Health and safety targets (including total
recordable injury rate and process safety
events) form part of Harbour’s performance
scorecard and affect the annual bonus
payments for all employees, including
executive directors.
The Board and HSES Committee (see pages
72 and 86) oversee HSES risk management
and are supported by our CEO, Chief Operating
Officer (COO), EVP Technical Services
(responsible for corporate HSES) and other
members of our Leadership Team, along with
the Managing Directors of our Business Units
and HSES leaders. Our Leadership Team
reviews HSES performance on a monthly
basis. In addition, safety is a topic during
monthly operating committee meetings and
quarterly business reviews. We engage with
our employees and contractors on a continual
basis and assess employee perceptions of our
safety culture through engagement surveys.
Additionally, we work with industry
associations, such as the International
Association of Oil & Gas Producers and the
Energy Institute, to share our experience
and learn from others. We are also partnering
with the global humanitarian landmine
clearance organisation, The HALO Trust,
to share good safety practice and improve
safety performance in both organisations.
As much of our activity is delivered by suppliers
and contractors, effective management of
our outsourced activities is critical to ensure
safe operations. We conduct risk-based
HSES assessments for contractors at the
pre-qualification stage as well as once work
has started. Our key performance indicators
for managing our contractors include: HSES,
cost, schedule, quality, greenhouse gas
emissions management and relationships.
Many of our contractors are subject to audits
throughout the contract period. For more
information on our responsible supply chain
practices, see page 56.
Safety metrics
2024
2023
2022
Recordable injuries^
14
7
9
Fatalities
0
0
0
Lost work day cases
4
0
4
Restricted work day cases
9
3
4
Medical treatment cases
1
4
1
Recordable injury rate (TRIR)
1
^
1.0
0.7
0.8
High potential incidents (HiPo)
2
12
3
13
High potential incident rate (HiPoR)
3
0.9
0.3
1.1
Hours worked (million)^
13.7
10.2
12.0
Work-related occupational illness
1
0
0
Tier 1 process safety events^
1
0
0
Tier 2 process safety events^
3
0
1
Tier 3R process safety events
4
4
N/A
N/A
Emergency response exercises
60
42
38
Incident management or emergency management team mobilisations
9
2
2
1
Total number of recordable work-related injuries divided by the number of hours worked (per million hours worked).
2
High potential incidents are work-related incidents with a high probability of causing a high-consequence injury.
3
Total number of high potential incidents divided by the number of hours worked (per million hours worked).
4
We included this metric in our scorecards for the first time in 2024. Tier 3R events have lesser consequences than
Tier 1 and 2 events. We use the threshold release size defined by UK regulators.
^
Indicates metrics that have undergone limited external assurance by Ernst & Young LLP (EY).
Category: team
• The winner was the DISOUCO JV
operations and projects team in Egypt.
Recognised for managing safety risks
proactively and outstanding project
execution in delivering increased
capacity at a central treatment plant
• The runners up were a team from the
Talbot project in the UK for the safe
delivery of a major project, and the
Transocean Norge One team in Norway
for bringing operators and contractors
together to deliver safe operations
Category: individual
• The winner was David Meade, an offshore
installation manager in the UK. David
used his stop the job authority when he felt
additional safety checks were needed
• The runners up were Jesus Padilla in Mexico
for championing safety both at Harbour
and with our partners, and Scott Altass in
the UK for driving improvements in process
safety culture
114
Nominations submitted
for the 2024 award
(2023: 74)
CEO Safety Awards
Open to individuals or teams, employees and contractors, the CEO Safety Awards
recognise outstanding contributions to safety across our global operations. Colleagues
can nominate individuals or teams for demonstrating good safety outcomes – from
extended injury-free performance on an asset, to personal interventions to stop
work and raise safety concerns, to the introduction of new ways of working or a change
in facility design to reduce safety risks. The winners and finalists in the team and
individual categories each choose a charity to receive a cash donation from Harbour.
A total of 114 nominations were submitted for the 2024 awards (2023: 74).
While all were worthy of recognition, the winners and runners up were:
41
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Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUSTAINABILITY REVIEW
CONTINUED
Occupational
health and safety
Approach
We continually work to ensure the health and
safety of everyone working for us by setting
clear leadership and performance expectations
and rigorously implementing our policies,
standards and procedures. We reinforce this
through training and competency assessments,
and we track our performance against internal
targets and top quartile industry benchmarks.
Safety performance and learnings from
recent incidents are discussed at our
monthly global town halls and feature
regularly on the agendas of team meetings
and other employee events. We recognise
exceptional individual and team safety
performance through our annual CEO Safety
Awards (see page 41).
Leading up to and following the acquisition
of the Wintershall Dea assets, we reviewed
our policies, standards and management
systems. We identified several standards
as a priority for review owing to our larger
and more diverse portfolio. For example,
we are reviewing our driving standard given
the significant onshore operations at some
of our newly acquired assets.
Performance
In 2024, we recorded 13.7 million hours
worked (2023: 10.2 million hours worked)
and 14 recordable injuries (2023: seven),
resulting in a TRIR of 1.0 (2023: 0.7). The
addition of the Wintershall Dea operating
regions has had an impact on our TRIR and
contributed to the increase. All injuries are
investigated based on potential reasonable
worst-case outcomes with the aim of sharing
learnings and continuously improving
our performance. We are implementing
initiatives to drive improvement across
our expanded operational footprint.
Looking ahead
In 2025, we plan to:
Expand our HSES programmes to improve
safety practices, behaviours and awareness
among our contractor community
Develop a global health and welfare
standard that will ensure consistent
standards and practices are in place,
including mental health awareness and
support, across the Harbour portfolio
Develop an annual health strategy that
sets a consistent yearly theme across
the company
1
Embedding a standardised ‘fitness
for work’ assessment in the UK and
Indonesia to help reduce the risk of
injury or harm to our people.
2
Implementing an enhanced and
comprehensive health and wellness
programme. This included a global
fitness challenge, on-site health
challenges and healthy eating campaigns.
3
Raising mental health awareness through
a variety of programmes. Mental health
was a core theme in our Global Safety
Day, and we also promoted men’s mental
Spotlight on occupational health
health across the organisation during our
‘Movember’ campaign. In the UK, we have
134 trained mental health first aiders.
We plan to extend this initiative across
our global portfolio.
To support neurodivergent colleagues,
we offer assessments conducted by an
external provider. This helps to identify
any adjustments that may be required
to the working environment to support
the employee. We also offer annual
health checks. Since we established
the programmes in 2023, 65 employees
have participated in neurodiversity
assessments and 1,123 health checks
have been undertaken.
We are committed to protecting the physical and mental health of our employees
and ensuring their welfare in the workplace. In 2024, we focused on:
134
trained mental health
first aiders in the UK
65
employees participated in
neurodiversity assessments
Process safety
Approach
We strive to achieve process safety
excellence and work continually to reduce
the likelihood and potential severity of
process safety events. We classify all
process safety events in line with the IOGP’s
Tier 1 and Tier 2 definitions for losses of
primary containment (LOPC), where Tier 1
events have the greatest potential
consequences, and investigate ways to
prevent recurrence. In 2024, we introduced
a lower tier LOPC process safety KPI (Tier
3R) as part of our scorecard that determines
the annual bonus for all employees. Tier 3R
events involve smaller quantities of
hazardous materials being released and are
taken as a leading indicator. The threshold
release size for our Tier 3R metric is aligned
with the threshold defined by UK regulators.
We investigate all process safety incidents and
near misses regardless of severity and share
learnings. For example, we distribute safety
bulletins and host monthly global safety team
meetings attended by onshore and offshore
personnel. We give particular focus to ensuring
we learn from high potential events and share
the investigation findings and learnings from
these events with our Leadership Team and
the Board’s HSES Committee.
Performance
In 2024, we had one Tier 1 process safety
event in Indonesia and three Tier 2 events
– one each in Indonesia, Norway and the UK
(2023: zero Tier 1 and 2 events). In addition,
we had four Tier 3R events. All events have
been rigorously investigated, resulting in
actions to improve our performance. We
track progress on identified improvement
actions in our monthly HSES report.
42
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Annual Report & Accounts 2024
We continued a review of major hazards
across our portfolio. This review, which will
continue into 2025, involves screening our
assets for inherent process safety risks
and assessing the effectiveness of controls.
We have used outputs from this review to
establish audit priorities for major hazards
management audits and to ensure the
prioritised assets receive appropriate focus
and support to deliver improvements.
To assess the effectiveness of our controls
and risk mitigation measures, we carry out
second line of defence audits across our
operational sites as part of our rolling
three-year audit schedule. These internal
independent audits are carried out to check
our risk management and compliance
functions, and to ensure first line of defence
control measures are in place and operating
as intended. In addition, we undertake
first line of defence (self-monitoring) audits
and field verifications.
We continued to embed our process safety
fundamentals, which contain key actions to
reduce high severity events, into our procedures.
We conducted site-based and virtual reality
training as part of our major accident
hazards awareness programme. In 2024,
272 UK-based employees attended
site-based major accident hazards training.
We also held a global town hall in which senior
leaders from across the business discussed
recent process safety events and actions
to improve our performance.
Looking ahead
In 2025, we will:
Progress our process safety culture and
application of risk management systems
Continue our major accident hazards
awareness programme for both onshore
and offshore personnel
Emergency preparedness
and crisis management
Approach
We operate a global asset base that requires
us to maintain emergency preparedness
processes and procedures, effective
response equipment and competent
personnel available to respond when needed.
Harbour uses a four-tier emergency response
and crisis management system to manage
operational, tactical and strategic issues. Each
level has a dedicated team of responders
available to support emergency and crisis
events that could impact the company.
Our procedures are set out in our crisis
management, emergency response, oil spill,
security and business continuity standards.
Performance
In 2024, there were nine events that
resulted in the mobilisation of the emergency
management support teams. These included
a mobilisation to support an incident involving
a vessel colliding with a Harbour-contracted
drilling rig in the UK, and support for two
offshore non-work-related medical events
in Indonesia.
Prior to the completion of the Wintershall Dea
transaction, we held sessions to share
information and identify critical processes
for emergency response. We put in place
a transition bridging document to connect
emergency response arrangements between
Business Units and the crisis management
team. These were tested through exercises
to ensure effective communication and
reporting processes were in place.
Other actions in 2024 included:
Completing 60 emergency response
exercises across the company
Conducting dedicated oil spill response
exercises in our Business Units to verify
arrangements and consolidate responder
knowledge in our procedures
Looking ahead
In 2025, we will:
Continue to enhance our global crisis and
emergency response systems and test
our processes by conducting exercises
Implement a competency-based
training and exercise programme
across the organisation
Review and update business continuity
recovery arrangements and associated
business impact assessments
Security
Approach
Our security standard sets out how we
manage security within Harbour in line with
our health, safety, environment and security
(HSES) policy. We define security incidents
as events in which the intent to cause harm
to our people, physical infrastructure,
information asset and finances is intentional;
we can be directly targeted, either specifically
or as a target of opportunity, or impacted as
collateral damage. The security risks we face
are increasingly complex given our expanded
geographical footprint and a global
environment characterised by unpredictability.
To respond to the needs of our larger
organisation and a rapidly evolving risk
landscape, we created a role for a Chief
Security Officer that supports our operations
globally as well as corporate disciplines
including emergency preparedness and
response, incident investigation,
communications and geopolitical analysis.
Performance
There were no material security incidents
affecting Harbour in 2024.
Looking ahead
In 2025, we will:
Integrate security management
elements across the portfolio
to create a consistent approach
Further develop our threat assessment
programme
Cyber security
Approach
Cyber security risks represent a growing
risk for our business. Our cyber security
programmes enable us to quickly identify,
assess and manage emerging threats,
while our business continuity plans include
procedures to assist us in recovering from
a cyber event. In addition to assessing our
own cyber security preparedness, we also
evaluate cyber security risks associated
with our use of third-party service providers.
In 2024, we continued to enhance our
security awareness to cover insider risk, as
well as strengthen our internal controls and
cyber security barriers, including assessing
their effectiveness.
Performance
In 2024, we had zero significant cyber
attacks or data breaches. In July, a
CrowdStrike Falcon update caused a global
outage, which also impacted Harbour.
We took prompt action and restored 90 per
cent of devices and critical services within
36 hours, with no adverse effects on
production. Further details on cyber and
information security risk are on page 68.
Looking ahead
In 2025, we will continue to review our
controls and conduct exercises across the
business to further develop our response
and recovery processes.
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22.5
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We are committed to addressing
the environmental impact of our
operations and playing a role in
the energy transition.
OTHER RELEVANT PAGES
HSES COMMITTEE REPORT
PAGE 86
OUR STRATEGY & BUSINESS MODEL
PAGE 12
10-15
mtCO
2
Viking planned
annual storage by 2035
0.07%
Methane emissions intensity
(2023: 0.03%)
Focus areas in 2024
Investing in our operations
to reduce emissions
Undertaking energy efficiency
and methane studies
Progressing our portfolio
of CCS projects
Continued focus on
environmental compliance
REDUCING OUR IMPACT
ON THE ENVIRONMENT
Conducting environmentally
responsible operations and playing
a leading role in the energy transition
are fundamental elements of our
strategy. We support the Paris
Agreement climate goals and are
focusing on near-term actions to
reduce emissions from the assets
we operate. These actions create a
credible pathway for us to achieve net
zero. In addition, we are investing in
CCS, with a leading position in Europe.
GRAEME DAVIES
EVP CCS
GHG intensity
1
kgCO
2
e/boe
CCS spend
$ million
Scope 1 and 2 emissions
1
mtCO
2
e
1
Reported on a gross operated basis.
44
Harbour Energy plc
Annual Report & Accounts 2024
UK
Norway
Denmark
391
221
25
659
2
Total
2030
2018
2025
2050
To manage our environmental impacts, we
apply recognised environmental management
practices such as the mitigation hierarchy, the
waste hierarchy, the precautionary approach,
best available techniques, and the ISO 14001
environmental management principles. These
environmental management practices are
embedded in our governance, risk and
performance framework.
In the planning phase of our projects, before
construction or operations can commence,
we conduct environmental and social impact
assessments. We use the outcomes to
identify the measures we can put in place
in our operations to lessen that impact.
We monitor the impact of our activities when
they move into the operational phase and
conduct environmental audits, as appropriate,
to ensure compliance with our standards
and to identify further opportunities for
improvement. We engage with stakeholders
throughout the lifecycle of our operations.
Looking ahead, in 2025, we will develop a
biodiversity plan to enable us to further assess
and manage our biodiversity impacts across
our recently enlarged portfolio of operations.
Our pathway to net zero
2024 achievements
Reduced operational emissions by
10 ktCO
2
e through emissions reduction
projects completed in 2024
Joined the Oil & Gas Methane
Partnership 2.0 (OGMP 2.0)
Implemented zero routine flaring
engineering study work
50
%
Reduction in our
Scope 1 and 2
gross operated
emissions vs 2018
Zero
Routine flaring
2025 plans
Implement a GHG emissions forecasting
tool across our portfolio
Submit our OGMP 2.0 integration
plan and first annual methane
report to the International Methane
Emissions Observatory
Define our zero routine flaring pathway
for the recently acquired Wintershall Dea
operated assets
Net
zero
for our gross
operated Scope
1 and 2
emissions
Our
emissions
baseline
<
0.2
%
Methane emissions
intensity across our
operated sites
Climate change and
the energy transition
Following the acquisition of the Wintershall Dea
assets, we reassessed our greenhouse
gas (GHG) strategy. We recognise that
near-term action is crucial and are therefore
maintaining our short and medium-term
targets and applying them across our
enlarged portfolio of operated assets.
These include a 50 per cent reduction in our
Scope 1 and 2 emissions by 2030 against
our 2018 baseline and targets on methane
intensity and zero routine flaring (see below).
We support the goals of the Paris Agreement
and net zero targets set by governments
globally. Over the longer term, we have
set an aspiration to be Net Zero by 2050
for our gross operated Scope 1 and 2 CO
2
e
emissions. This aligns with the approach
taken by the oil and gas sector and allows for
the implementation of emerging technology.
Our short and medium-term targets provide
a credible pathway for us to achieve net
zero over the longer term. We will maintain
focus on reducing our own emissions and,
if necessary, mitigate remaining emissions
by investing in independently verified
carbon credits.
We will continue to review our approach
regularly to account for changes in our
portfolio, protocols and other factors.
To support the global energy transition, we will
continue to invest in projects to enable CCS.
Our CCS projects have the potential to store
multiples of our own Scope 1 and 2 gross
operated emissions by early in the next
decade, and more than our Scope 1, 2 and
3 emissions on an equity basis by 2050.
We spent $366 million across our energy
transition activities in 2024 (2023: $311
million). The 2024 expenditure includes $284
million on decommissioning, $72 million on our
CCS projects (see page 142), $5 million on
emissions reduction activities and $5 million
for the acquisition of verified carbon credits.
Emissions reduction
We identify and assess emissions reduction
opportunities against criteria that include
potential impact, implementation cost and
timeframe. The successful opportunities are
then taken to development and incorporated
into emissions reduction action plans (ERAPs).
We reviewed our ERAPs regularly throughout
2024 to ensure that the decarbonisation
activities were progressing as planned
and to update them with newly identified
opportunities. This ensured that our reduction
plans were up to date and integrated with
the business plan.
We continued to mature and deliver our
ERAPs and explore new technologies to
drive performance improvements, including:
Implementing a waste heat recuperation
project on Mittelplate in Germany,
where waste heat is recovered from the
produced water and used to supplement
the process heat requirements, thereby
reducing heat energy requirements
Total net CO
2
storage resources
1
mtCO
2
1
Based on management estimates,
with >70 per cent independently verified.
2
Total includes resources associated with two
areas in the Netherlands, where there is currently
no storage licence in place, see page 202.
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STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUSTAINABILITY REVIEW
CONTINUED
Replacing a pneumatic gas-powered
chemical injection pump with an electrical
pump at the West Lobe platform in
Indonesia. This will reduce methane
emissions on the platform by up to
6,000 tCO
2
e, and is key for our OGMP
2.0 commitments (see page 50)
Completing studies for Britannia and
J-Area in the UK, which identified the
optimum flare gas recovery technology
required to recover low pressure flare
gas. We plan to commence front-end
engineering design (FEED) work in 2025
Completing studies across our late life
Armada, Lomond and North Everest
assets in the UK, to assess the technical
and economic viability of a flare gas
recovery technology. We plan to conduct
additional studies on Armada and North
Everest to identify the optimum flare gas
recovery strategy for each asset
Initiating an assessment of the economic
feasibility of low carbon power and
electrification options for offshore assets
in the UK, comprising a standalone wind
turbine partial electrification concept
and third-party grid connected wind
farm opportunities. This assessment
is ongoing and will continue in 2025
We are also working with our partners to
reduce emissions. For example, the installation
of a small wind farm at the CMA-1 asset in
Argentina will reduce fuel gas consumption for
power generation. This is expected to result in
a reduction of around 14 ktCO
2
e a year, with
start-up expected in the second half of 2025.
Task Force on Climate-
related Financial Disclosures
(TCFD) statement
We support the need for more consistent and
comparable disclosure around climate-related
risks and opportunities. The following pages
(46 to 50) of this report align with the
recommendations issued by the Financial
Stability Board’s TCFD, which is aligned to the
Financial Conduct Authority’s UK Listing Rules
6.6.6(8). We consider our TCFD reporting to
be compliant with the disclosure requirements
of section 414CB of the Companies Act.
See page 59 for our TCFD index.
1. Climate governance
The Board is accountable for our climate
strategy and ensuring Harbour maintains
effective climate risk management and
internal control systems, including the setting
and monitoring of the company’s GHG
emissions reduction targets. It has oversight
of climate-related risks and opportunities
and ensures climate-related considerations
are embedded in our decision-making. This
includes the application of financial criteria,
such as our internal carbon price, across
key investment decisions.
The HSES Committee of the Board evaluates
our policies and systems, the quality and
integrity of our reporting, and the suitability
of our management system to manage
current and emerging HSES risks, including
climate-related risks. The Committee reviews
our key performance indicators and targets,
and progress against our GHG strategy and
related targets, updating the Board at least
annually. Further details on the HSES
Committee are on pages 86 and 87.
Through the Remuneration Committee
and with input from the HSES Committee,
the Board determines annual targets and
key performance indicators, including GHG
emissions, for bonus schemes operated
by the company and assesses performance
against the metrics. The Audit and Risk
Committee further supports the Board
through consideration of the impacts of the
energy transition on Harbour, in particular
on the scale and timing of implications and
the long-term resilience of the business, as
well as the impact on the financial statements.
For further information see note 2 in the
financial statements on pages 137 to 142;
and for more information on the Audit and
Risk Committee see pages 82 to 85.
Our CEO has executive responsibility for
Harbour’s sustainability policy and how it is
implemented across the company. Our EVP
Technical Services is responsible for our
HSES policies, standards and procedures,
and for driving forward delivery of our GHG
strategy. CCS strategy and projects are the
responsibility of our EVP CCS, which is a
newly created role.
1
The skills and experience of the directors serving on the HSES Committee are set out on pages 75 and 76.
Climate change management structure
The Board
Oversight of climate change risk management
Audit and Risk
Committee
Non-executive directors
appointed by the Board to
oversee the effectiveness
of the system of risk
management and
internal control
Remuneration
Committee
Non-executive directors
appointed by the Board to
set remuneration policy in
alignment with strategy
Nomination
Committee
Non-executive directors
appointed by the Board
to review and advise
on Board structure,
organisation and succession
HSES
Committee
Non-executive directors
appointed by the Board
to review and advise
on sustainability policies
and practices including
climate change
1
Business Units and functions
Line management supported by functional teams, with responsibility for implementing
Harbour’s GHG strategy with functional support and assurance
CEO and Leadership Team
Most senior individuals with accountability for climate change risk management
Chief Operating
Officer
Decarbonisation and
licence to operate
EVP Technical
Services
HSES policies, procedures
and standards
EVP Carbon Capture
and Storage
CCS strategy
and development
SVP Corporate HSES
HSES performance tracking and management
46
Harbour Energy plc
Annual Report & Accounts 2024
2
Consequence severity is defined by the scale of the risk/opportunity posed by a hazard/indicator on Harbour’s business and assets.
2. Climate strategy
In line with TCFD’s recommendation to
disclose the actual and potential impacts
of climate-related risks and opportunities
on our business, strategy and financial
planning, we conduct scenario analysis,
the outcomes of which are described
on the following pages (47 to 49).
Climate-related risks and opportunities
Following completion of the Wintershall Dea
transaction we conducted scenario analysis
to re-evaluate the potential climate-related
risks and opportunities (CRROs) relevant
to our enlarged portfolio. This included
reviewing the outputs of our 2023 scenario
analysis and assessing the impact of
possible shifts in the macroeconomic
outlook, technology developments, policy
and legal implications, and the projected
future demand for our products.
We identified our top CRROs and considered
the resilience of Harbour’s assets over the
longer term. The CRROs process is guided
by our sustainability policy and aligned with
our risk management policy.
Assessing our climate-related impacts
The TCFD recommends that organisations use
a scenario in which global warming is kept to
well below a 2°C increase during this century,
compared with pre-industrial levels, to test
portfolio resilience. Such scenarios usually
feature a reduction in demand for fossil fuels
and a growth in clean technologies.
In line with TCFD’s recommendations we
assessed our climate-related risks and
opportunities against six scenarios, including
three transition scenarios and three physical
risk scenarios.
Timeframe selection
Recognising that the manifestation of
transitional risks and opportunities will
happen over a shorter time horizon than for
physical risks, the selected climate scenarios
were assessed across three timeframes. The
timeframes selected take into consideration
the expected remaining operational life of
our asset portfolio as well as our Net Zero
by 2050 aspiration. Physical risks were
assessed over the short term (2030) and
long term (2050) and assets were divided
into two groups for the analysis. The first
group covered assets with a cessation of
production (COP) between 2025 and 2034
and were assessed using baseline and
short-term (2030) scenarios. The second
group of assets has a COP between 2035
and 2050 and beyond; these assets have
been assessed using baseline, short-term
(2030) and long-term (2050) scenarios.
Scenario analysis
To consider the climate resilience of
Harbour’s portfolio, we identified a shortlist of
both physical and transitional CRROs, taking
into account our principal risks, and the range
of CRROs noted by IPIECA (the global oil and
gas association for advancing environmental
and social performance across the energy
transition), the World Bank, the International
Energy Agency (IEA), the World Business
Council for Sustainable Development and
other sources for our industry.
We refined the CRROs by assessing the
consequence severity
2
of each risk/opportunity
if it was to materialise, and the likelihood
of that risk/opportunity materialising under
the various scenarios and timeframes.
We considered transitional CRROs on a
regional basis and, where relevant, on a
global level to reflect wider socioeconomic
drivers. Physical CRROs were assessed
on a regional basis reflecting the localised
effects of long-term physical risks.
The consequence severity and likelihood
ratings enabled us to assess the most
significant CRROs using a consistent
methodology. The tables on pages 48 and
49 highlight our highest-rated transitional
risks and opportunities, and our physical
risks. For details on our oil and gas price
sensitivity analysis please see note 2 to the
financial statements on pages 137 to 142.
Transition scenarios
We used three scenarios from the
International Energy Agency (IEA) to
assess the resilience of our portfolio.
The IEA scenarios are aligned to best
practice and are widely used across
the oil and gas industry to assess
transition risks. The IEA scenarios are:
Net Zero Emissions (NZE) by 2050
Scenario:
which is consistent with
limiting the global temperature rise
to 1.5ºC
Stated Policies Scenario (STEPS):
which reflects current policy
commitments based on sector-
by-sector and country-by-country
assessments
Announced Pledges Scenario (APS):
which assumes that all climate
commitments made by government
and industries will be met in full and
on time
Physical scenarios
We selected three Shared Socioeconomic
Pathways (SSP) scenarios, as defined by
the Intergovernmental Panel on Climate
Change, to assess potential physical risks
on our portfolio up to 2050:
SSP1-2.6 (also known as the
Sustainable development scenario):
with a temperature outcome of
+1.7ºC by 2050, and +1.8ºC by 2100
SSP2-4.5 (also known as the Middle
of the road):
with an estimated
temperature outcome of +2.0ºC by
2050, and +2.7ºC by 2100
SSP5-8.5 (also known as the Fossil
fuel-driven development scenario):
with a temperature outcome of
+2.4ºC by 2050, and +4.4ºC by 2100
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CONTINUED
Transition risks
In 2024, we undertook oil, gas and carbon
price sensitivity analysis for the three
transition scenarios to assess the resilience
of the business to the prospective impact of
these scenarios. These scenarios were then
compared to the company’s long-range plan,
which is approved by the Board. An important
aspect of mitigating our climate change risks
includes evaluating opportunities to apply
of material impairment noted in the price
sensitivity analysis undertaken, our portfolio
appears to be generally robust to all
scenarios analysed.
For further information on the potential
financial impacts of these transition risks,
refer to note 2 to the financial statements
on pages 137 to 142.
technological innovation and efficiency to
decrease energy use and GHG emissions
across our operations and working with
partners to develop a range of lower GHG
emissions pathways.
The scenarios consider the unmitigated
effect of the key transition risks and
opportunities. While the analysis is
inherently uncertain, due to the lack
REPUTATION
MARKET
Accelerated shift in consumer demand for oil and gas products
Increasing focus on climate change by investors
CATEGORY
Risk
Risk
Description
The risk of a reduction in customer demand for fossil fuel products
arising from new or more stringent demand-side regulations and changes
in consumer preferences.
Increased focus on climate change by investors includes challenges in
raising equity and debt due to wider ESG investment mandates, pressure
on investors to avoid or lower exposure to fossil fuel companies, increased
capital charges for insurance companies across Europe and/or inability
to meet sustainability standards set by investors.
Timeframes
Short-term
(2030)
Medium to
long-term (2040)
Long-term
(2050)
Short-term
(2030)
Medium to
long-term (2040)
Long-term
(2050)
Scenarios
STEPs
Most significant
Most significant
Most significant
Moderate
Moderate
Moderate
APS
Most significant
Most significant
Most significant
Moderate
Major
Major
NZE
Most significant
Most significant
Most significant
Moderate
Most significant
Most significant
Impact on business
strategy and
financial planning
A material and sustained decrease in the price of our products, particularly oil,
due to reduced demand, would impact cash flows, the remaining productive
life of our assets, and our ability to deliver competitive shareholder returns.
Our business remains generally robust across various scenarios, as a
significant decline in oil and gas prices is not anticipated in the short
to mid-term. However, we continue to monitor market conditions closely
and adapt our strategies to ensure resilience and sustainability.
While the increasing focus on climate change by investors is influencing
our business strategy and financial planning, this risk remains stable.
How the risk is
managed
Regularly reviewing our strategy and business model to align with
the energy transition, considering the impact of future oil and gas
pricing scenarios
Actively contributing to industry representation on the role of oil
and gas in the energy transition and energy security
Seek to maintain a balance of oil and gas to mitigate against volatility
Investing in CCS, particularly where the reuse of existing oil and
gas infrastructure can help reduce development costs
Climate strategy and delivery are monitored by the Board and
HSES Committee
Strengthening our risk management framework to identify, assess
and mitigate climate-related risks, ensuring the resilience of our
operations and assets
Putting in place credible GHG emissions reduction plans, increasing
energy efficiency and promoting sustainable practices, with emissions
reduction targets included in the company’s bonus systems
REPUTATION
MARKET
Building a distinctive and credible position in CCS in light of increasing
demand for new clean technologies in oil and gas
Fluctuations in energy prices and demand
CATEGORY
Opportunity
Risk/Opportunity
Description
Further investment in CCS technologies generates a large portfolio
of operating CCS sites with Harbour recognised as leading player in
the sector.
Potential increase in energy prices assumes demand and/or prices for
natural gas are stronger than assumptions made under the transition
pathways, enabling increased capital to invest in transition technologies
and greater return for shareholders.
Timeframes
Short-term
(2030)
Medium to
long-term (2040)
Long-term
(2050)
Short-term
(2030)
Medium to
long-term (2040)
Long-term
(2050)
Scenarios
STEPs
Major
Major
Major
Most significant
Most significant
Most significant
APS
Major
Major
Major
Most significant
Most significant
Most significant
NZE
Major
Most significant
Most significant
Most significant
Most significant
Most significant
Impact on business
strategy and financial
planning
CCS is anticipated to experience rapid growth across various scenarios.
With the expected rise in carbon prices, large-scale deployment of CCS
presents a significant opportunity to generate long-term revenue and
safeguard jobs. This strategic focus on CCS aligns with our commitment
to reduce carbon emissions and support the energy transition.
Increased oil and gas prices present a significant opportunity for Harbour,
boosting revenue and cash flow, enabling strategic investments in
high-return projects and supporting long-term initiatives like CCS. This
enhances risk management, strategic planning and the ability to deliver
competitive shareholder returns. By leveraging these opportunities,
Harbour can strengthen its market position, support sustainable growth
and contribute to the energy transition.
How the risk/
opportunity is
managed
Leading European CCS portfolio, including material participation
in the Viking (UK) project, the Greensand Future (Denmark) project
under construction, and potential other projects in Denmark, the
UK and Norway
Dedicated CCS Business Unit to advance projects under
development and prioritise expenditures
Prioritising high-return projects, expanding existing assets and
investing in low-carbon technologies
Financial planning allocates increased revenue towards growth
initiatives, debt reduction and shareholder returns
Continuous market analysis and transparent stakeholder engagement
ensure strategic agility and alignment with sustainability goals
For details on how we manage our exposure to commodity prices
see page 68 and for details of our oil, gas and carbon price sensitivity
analysis see note 2 to the financial statements on pages 137 to 142
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Annual Report & Accounts 2024
CLIMATE SCENARIOS
DATA
2030
SHORT-TERM
2050
LONG-TERM
SSP2-4.5
1
SSP5-8.5
1
SSP1-2.6
1
Physical risks
We conducted scenario analysis to assess
acute and chronic hazards; these are listed
in the graphic below.
We calculated the estimated production
volume percentage potentially exposed to
high or extreme risks under each timeframe
and scenario. The table below shows the
most significant acute and chronic hazards
that the portfolio is exposed to.
such as asset design, location and operating
processes. All of our operated assets are
designed to withstand heavy weather events
and comply with the relevant and emerging
regulatory requirements.
Given the current resilience of our
assets to physical risks we do not expect
the increased exposure to hazards under
different scenarios to have a material effect
on our business. We will continue to assess
our climate-related risks and opportunities
and update them as appropriate.
Following the Wintershall Dea transaction,
heat stress has increased marginally in
relevance due to a number of onshore
assets that we acquired; however, there
is limited difference in exposure over the
different timeframes and scenarios.
The potential exposure to certain hazards
increases significantly in a 2050 timeframe
under the most extreme SSP5-8.5 scenario
compared to a baseline scenario. However,
the effects of potential exposure to different
hazards are dependent on a range of factors
CHRONIC CHANGE IN TEMPERATURE
EXTREME PRECIPITATION
HEAT STRESS
CATEGORY
Chronic
Acute
Acute
Description
Chronic change in temperature refers to a
long-term alteration in the average temperature
of the earth’s surface.
Increase in frequency and intensity of
extreme precipitation events compared
to a baseline climate.
The prevalence of temperature and humidity
conditions that may have adverse physiological
effects in baseline and future climates.
Countries
Algeria, Argentina, Germany, Libya, Mexico,
Norway, the UK, Vietnam
Indonesia, Mexico, Norway, the UK, Vietnam
Algeria, Egypt, Libya, Mexico, Vietnam
Impact on business
strategy and financial
planning
Increased operational costs due to the need for
enhanced cooling systems and infrastructure.
Changes in energy demand patterns affect
production and supply strategies. Long-term
planning adjustments are necessary to
account for shifts in climate conditions.
Disruptions to operations and supply chains
due to flooding and infrastructure damage.
Increased costs for maintenance and repairs,
potential delays in project timelines and higher
insurance premiums.
Reduced workforce productivity and increased
health and safety risks. Higher operational
costs due to additional cooling and protective
measures. Potential for increased downtime
and reduced efficiency.
Timeframes
Short-term
(2030)
Long-term
(2050)
Short-term
(2030)
Long-term
(2050)
Short-term
(2030)
Long-term
(2050)
SSP scenarios
1-2.6
2-4.5
5-8.5
1-2.6
2-4.5
5-8.5
1-2.6
2-4.5
5-8.5
1-2.6
2-4.5
5-8.5
1-2.6
2-4.5
5-8.5
1-2.6
2-4.5
5-8.5
Estimated production
volume % exposed to
high or extreme risk
0.0%
2.8%
5.0%
20.1%
57.6%
87.9%
45.3%
36.6%
40.4%
27.8%
27.8%
36.4%
12.8%
12.8%
12.8%
12.2%
12.2%
12.2%
How the risk is
managed
Implementing advanced cooling
technologies and infrastructure upgrades
Adjusting operational schedules to
mitigate temperature changes
Conducting regular scenario analysis
to anticipate and plan for long-term
climate shifts
Enhancing flood defences and
infrastructure resilience
Developing contingency plans
for extreme weather events
Investing in robust supply chain
management and alternative
logistics solutions
Implementing heat stress management
programmes and providing adequate
protective equipment
Adjusting work schedules to avoid peak
heat periods
Investing in cooling systems and facilities
to ensure safe working conditions
0-33%
34-66%
67-100%
Physical risks and scenarios
ACUTE HAZARDS
Extreme high temperature
Extreme low temperature
Extreme precipitation
Heat stress
Heatwave hazard
CHRONIC HAZARDS
Chronic change in precipitation
Chronic change in temperature
Chronic change in wind speed
Cooling degree days
Future drought hazard
Heating degree days
Precipitation variability
Sea level rise
Temperature variability
We assessed acute and chronic hazards over the short term (2030) and long term (2050) using Shared Socioeconomic Pathways (SSP) scenarios.
1
See page 47 for further details on these scenarios.
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SUSTAINABILITY REVIEW
CONTINUED
3. Climate risk management
Climate change and the energy transition are
recognised by the Board as a principal risk
facing the company. As such, the transition
risks and physical risks identified on pages
48 and 49 are considered and managed
in line with our risk management framework
and policy, which are aligned with the ISO
31000 risk management standard.
We record substantive short, medium
and long-term climate-related risks and
mitigations, and these are reported to
the CEO, Leadership Team and the Board.
See pages 60 to 62 for information on
our risk management framework.
4. Climate metrics and targets
We report six of the 15 Scope 3 categories
outlined by the GHG Protocol. While the
remaining Scope 3 categories are not currently
relevant to the company, we will continue
to assess our Scope 3 reporting boundary.
Our Scope 1 and 2 emissions boundary,
which includes activities where we have
operational control, has remained the same
in 2024, other than through the addition of
material assets through the Wintershall Dea
transaction; our baseline year remains set at
2018. We will continue to review this on an
annual basis. When calculating our emissions,
we follow guidance from sources including the
GHG Protocol, IPIECA Sustainability Reporting
Guidance and the UK Environmental and
Emissions Monitoring System. For more
information on our energy and GHG emissions
data, see pages 52 to 53.
The metrics, shown below left, reflect the
ongoing investments relating to the energy
transition. The metrics include capital and
operating expenditures related to reducing
or offsetting emissions, mitigating potential
risks, and for opportunities such as CCS.
Our targets and pathway to net zero are
detailed on page 45. We will continue to
actively manage our approach and set
further targets in the future as appropriate.
Delivering against the company’s emissions
targets are part of employee remuneration
through the annual bonus scheme. In 2024,
GHG emissions performance accounted for
15 per cent of the scorecard on which the
bonus is calculated. For more information
on the company scorecard, see the Directors’
remuneration report on page 106.
Methane
Methane makes up five per cent of our
total greenhouse gas emissions on a CO
2
e
basis. Our methane intensity, which refers
to methane emissions from our operated
assets as a percentage of marketed gas,
was 0.07 per cent in 2024 (2023: 0.03 per
cent). We are committed to reducing methane
emissions and joined the Oil & Gas Methane
Partnership 2.0, a reporting and mitigation
programme of the United Nations
Environment Programme, in 2024. As part
of this, we are working to achieve the Gold
Standard for methane emissions reporting
and reduction.
To comply with methane regulations in
Mexico and the EU, we have developed a
comprehensive action plan and evolved our
measurement techniques to support the
requirements on leak, detection and repair,
as well as on monitoring, reporting and
verification. Our initiatives aim to enable
precise emissions quantification and drive
effective reduction strategies.
We engage with joint venture partners
to promote best practices and innovative
technologies, with the aim of amplifying
methane mitigation efforts for greater
environmental impact.
Flaring
In 2024, flaring amounted to 37 ktonnes
(2023: 47 ktonnes), showing a reduction
of 22 per cent through improved production
efficiencies. Routine flaring made up 63 per
cent of the total volume flared, with the
remainder comprising non-routine flaring
(such as from planned maintenance
activities), and flaring for safety reasons.
We remain committed to achieving zero
routine flaring by 2030.
1
See page 53 for a breakdown of our Scope 3 emissions by category.
2
Includes carbon credits $5 million (2023: $6 million), emissions reduction projects
$5 million (2023: $11 million), and CCS $72 million (2023: $39 million).
3
2024 figure includes addition of storage resources of two new CCS licences in Viking’s vicinity awarded in 2023.
4
Total energy transition spend ($366 million) divided by operating costs ($1.6 billion).
5
Total energy transition spend ($366 million) divided by pre-tax free cash flow ($1.4 billion).
6
Global operated assets.
Climate change risk-related metrics
PERCENTAGE ANNUAL BONUS LINKED TO GHG TARGETS
15
%
2024
15
%
2023
INTERNAL CARBON PRICING SENSITIVITY
$
100
/tonne
2024
$
100
/tonne
2023
NUMBER OF DAYS LOGISTICS WERE DISTURBED AT
OPERATED SITES RELATED TO ADVERSE WEATHER
8
days
2024
20
days
2023
TOTAL CAPITAL SPEND ON DECOMMISSIONING
$
284
m
2024
$
268
m
2023
SPEND ON ENERGY TRANSITION ACTIVITIES
(EXCLUDING DECOMMISSIONING)
2
$
82
m
2024
$56
m
2023
NET CO
2
STORAGE RESOURCES FROM HARBOUR’S
VIKING CCS LICENCES
3
250
mtCO
2
2024
180
mtCO
2
2023
SCOPE 1 & 2 EMISSIONS
1.3
mtCO
2
e
2024
1.3
mtCO
2
e
2023
SCOPE 3 EMISSIONS
1
37.4
mtCO
2
e
2024
12.8
mtCO
2
e
2023
PERCENTAGE OPERATIONAL SPEND ON
CLIMATE-RELATED RISK MITIGATION
4
22
%
2024
28
%
2023
PERCENTAGE TOTAL CASH FLOW SPEND
ON ENERGY TRANSITION ACTIVITIES
5
27
%
2024
21
%
2023
GHG INTENSITY
26.3
kgCO
2
e/boe
2024
22.5
kgCO
2
e/boe
2023
PRODUCTION DOWNTIME RELATED
TO ADVERSE WEATHER
6
0
days
2024
0
days
2023
50
Harbour Energy plc
Annual Report & Accounts 2024
Acorn
Luna
Havstjerne
Greensand
Greenstore
Viking
Poseidon
Harbour CO
2
storage licence interests
Proposed CO
2
transportation pipelines
Energy hubs
NOR-GE Pipeline
Wilhelmshaven
Immingham
A leading CO
2
storage position in Europe
We have a leading CO
2
storage
position in Europe, with projects in
the UK, Denmark and Norway. We
are also involved in plans to develop
an export hub for CO
2
in Germany.
Viking (UK)
Located in the Humber region, the most
industrialised and largest CO
2
-emitting
region in the UK, Viking CCS could help the
UK reach its net zero targets. Viking’s gross
CO
2
storage resources increased to 417
million tonnes (2023: 300 million tonnes)
as at year end 2024. This follows the
addition of the storage resources of
two new CCS licences in Viking’s vicinity
awarded in 2023.
Led by Harbour Energy (60 per cent
interest, operated), with partner bp (40
per cent interest), CO
2
is planned to be
transported and stored in depleted gas
reservoirs in the UK’s Southern North Sea.
The project has the potential to provide
storage for shipped CO
2
from emitters
both in the UK and in Europe.
Front-end engineering design (FEED)
progressed well in 2024, with the Viking
CCS Development Consent Order (DCO) for
the onshore CO
2
pipeline completing the
statutory examination. Recommendations
from the examination were submitted to the
UK Secretary of State for Energy Security
and Net Zero in December for approval.
The project could have a large positive
impact on inward investment, jobs and
skills in the region. In 2024, Harbour
together with members of the Viking CCS
Industrial Cluster provided £1.5 million
to fund a new Skills and Apprenticeship
Centre at CATCH. This industry-led training
organisation provides opportunities for
young people to develop careers in the
energy and industrial sectors across the
Humber region. The funding has enabled
an 80 per cent increase in CATCH’s
apprenticeship capacity, with more
than 90 additional apprentices in training
in 2024.
Carbon capture and storage (CCS)
Greensand Future (Denmark)
In 2024, together with our partners, we
announced a final investment decision on
the Greensand Future project. The project
plans to store CO
2
from Danish emitters
in a depleted oil field in the Danish North
Sea and has the potential to become the
EU’s first operational CO
2
storage facility.
Greensand Future aims to capture and store
400,000 tonnes of CO
2
each year, with
operations expected to start from 2026.
The project builds on a successful pilot
CO
2
injection test completed in March
2023 that demonstrated the feasibility
of cross-border, offshore CO
2
storage
across the full value chain, from capture
to transport and storage.
Harbour Energy holds a 40 per cent
non-operated interest in the project,
alongside operator INEOS (40 per cent)
and Nordsøfonden (20 per cent).
Greenstore (Denmark)
Harbour Energy, as operator, alongside
partners INEOS and the Danish state entity
North Sea Foundation were awarded a
licence to explore the potential for CO
2
storage in the Gassum areas in Denmark
in 2024. This opens a new opportunity
for appraisal of onshore CO
2
storage
in Denmark within a saline aquifer and
could provide a route to competitive CO
2
storage located close to the main centres
of European industrial CO
2
emissions.
For more information please see page 31.
For details on all our CCS projects, including
Havstjerne and Luna in Norway and Acorn
in the UK, please see our website.
Up to
20,000
jobs
Potentially created at peak construction
by Viking CCS Industrial Cluster projects
10-15
m tonnes
CO
2
potentially stored per year by 2035
417
m tonnes
Initial gross storage capacity
>
50
%
Of Humber emissions could be captured,
transported and stored by Viking
>
£13
bn
Investment from 2025-2035 across the CCS
value chain, including capture and storage
CATCH’s Skills and Apprenticeship
Centre is a fantastic opportunity to
help develop the future UK workforce
needed for projects such as Viking
CCS. We were happy to play a leading
role in this significant expansion of
CATCH, which will help to provide the
skilled workers the major projects
in the Humber region will need in the
coming years.
GRAEME DAVIES
EVP CCS
51
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUSTAINABILITY REVIEW
CONTINUED
Energy use and
GHG emissions
GHG emissions
Scope 1 and 2 emissions
Our Scope 1 (direct) emissions are those from
static combustion activities (ie fuel, flare
and other production-related emissions).
The largest proportion of our GHG emissions are our Scope 3
emissions
5
, with emissions associated with the use of our sold
products being the most significant contributor.
In 2024, Scope 1 emissions amounted to
1.26 mtCO
2
e, a 2.4 per cent decrease from
2023. The decrease was largely driven
by decarbonisation projects implemented.
Our Scope 2 (indirect) emissions (from
consumption of purchased electricity, heat
or steam) of 26.0 ktCO
2
e account for only
a small percentage of our carbon footprint.
Production operations accounted for 99.2 per
cent of all Scope 1 and Scope 2 emissions,
with drilling and decommissioning accounting
for the remainder. Only three per cent of our
emissions were a result of safety-related,
routine and non-routine flaring (accounted for
within our production and well testing activities).
For more information on our emissions
and environmental data, including our
Streamlined Energy and Carbon Reporting
(SECR) disclosures, please see below and
our 2024 ESG data and reporting appendix
on our website.
5
All Scope 3 emissions reported are as a consequence of Harbour’s operational activities apart from investment
emissions that take into account static emissions, as a portion of ownership, from Harbour’s non-operated assets.
Greenhouse gas emissions
SCOPE 3 DOWNSTREAM
Indirect emissions that are not
within our operational control,
but associated with the use of
our sold products.
SCOPE 1
Direct emissions that result from
our operating activities:
Fuel
Flaring
Other production-related emissions
SCOPE 2
Indirect emissions that result from our
operating activities from purchased:
Electricity
Heat
Steam
SCOPE 3 UPSTREAM
Indirect emissions that are not owned or
operated by the company, but associated
with the operation of our assets:
Transportation and distribution
Waste generation
Employee business travel
Outsourced drilling activities
Non-operated static emissions
36.3 mtCO
2
e
1.3 mtCO
2
e
1.1 mtCO
2
e
GHG and energy metrics (including relevant SECR
1
indicators)
2024
2023
2022
Emissions
Scope 1 GHG emissions (ktCO
2
e)^
1,259.2
1,289.9
1,384.7
UK (North Sea) SECR
852.4
938.1
997.7
Scope 2 GHG emissions (ktCO
2
e)
2
^
26.0
3.4
4.4
Scope 3 GHG emissions (ktCO
2
e)
3
^
37,401.9
12,753.5
383.9
Scope 3 GHG emissions – excluding use of sold products (ktonnes CO
2
e)^
1,074.8
805.5
383.9
Gross operated GHG intensity (kgCO
2
e/boe)^
26.3
22.5
21.2
Net equity GHG intensity (kgCO
2
e/boe)
4
14
22
19
Methane (tonnes)
2,287
2,797
3,308
Flaring
Flaring (tonnes)
36,825
47,491
51,047
Venting (tonnes)
2,411
1,965
3,171
Energy
Energy consumption (million GJ)^
18.1
18.1
22.8
UK (North Sea) SECR
11.9
13.0
22.4
Fuel gas (million GJ)
17.2
17.3
20.9
Energy intensity (GJ/tonne production)^
2.1
1.9
2.1
1
Streamlined Energy and Carbon Reporting – The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 requires
the disclosure of metrics related to energy and emissions for UK listed organisations.
2
Increase in 2024 primarily due to the inclusion of additional offices following the Wintershall Dea transaction. We calculate our Scope 2 emissions using a location-based method.
3
Increase in 2024 primarily due to incorporating emissions from sales gas into our Scope 3 calculation.
4
Calculated on a net equity pro forma basis.
^
Indicates metrics that have undergone limited external assurance by our external auditor Ernst & Young LLP (EY).
52
Harbour Energy plc
Annual Report & Accounts 2024
Scope 3 emissions
In 2024, our reported Scope 3 emissions from
sources not owned or operated by the company
but as a consequence of our activities were
37.4 mtCO
2
e (2023: 12.8 mtCO
2
e).
Our Scope 3 emissions include our net
equity share of emissions associated with:
Goods and services from drilling projects
and appointed operator activities:
283.2 ktCO
2
e
Upstream transportation and distribution
from logistics: 114.8 ktCO
2
e
Waste generated in operations: 1.9 ktCO
2
e
Harbour employee business travel:
3.7 ktCO
2
e
Static emissions (as a portion of ownership)
from our non-operated assets: 671.2 ktCO
2
e
Use of sold products: 36.3 mtCO
2
e
We expanded our Scope 3 reporting in 2023
to include additional categories in our GHG
value chain. In 2024, we continued to evolve
our approach and incorporated emissions
from sales gas in calculating emissions from
the use of our sold product.
This was the primary contributor to the
increase in our total Scope 3 emissions
year on year, along with the inclusion of
the Wintershall Dea portfolio.
Effluents, spills and waste
Approach
We work hard to avoid pollution and
continually assess the risks associated
with our production and other activities.
All our operations maintain comprehensive
spill contingency plans. We also have
ongoing contracts with spill-response
specialists to provide emergency support
in the unlikely event of a major incident.
See page 43 for more information on our
approach to emergency preparedness
and crisis management.
Performance
In 2024 we recorded 48 loss of primary
containment events, resulting in 0.5 tonnes
being released to the environment. Although
the frequency of events has increased, the
resulting release to the environment was
relatively small and comparable to 2023. All
events were thoroughly investigated, resulting
in actions to help prevent reoccurrence.
Effluents and spills metrics
2024
2023
2022
Discharge of produced water
(million tonnes)^
3.0
2.6
2.5
Number of hydrocarbon spill
incidents
48
11
12
Quantity of hydrocarbon
released to the environment
(tonnes)
0.5
0
0.01
Number of chemical spill
incidents
71
10
27
Quantity of chemicals released
to the environment (tonnes)
11.3
6.2 208.6
Oil in produced water (ppm-wt)
13.5
11.2
15.4
Oil in produced water (tonnes)
39.9
29.7
39.2
^
Indicates metrics that have undergone limited external
assurance by our external auditor Ernst & Young LLP (EY).
For data on waste please see our ESG data
and reporting appendix on our website.
Decommissioning
Approach
In decommissioning our assets, our focus is on
ensuring the safety of our workforce, protecting
the environment and minimising the impact
on communities during and after closure.
Most of our decommissioning activities are in
the UK, where they are aligned with the North
Sea Transition Authority’s Decommissioning
Strategy and Stewardship Expectations and
comply with the decommissioning guidance
notes prepared by the UK Department for
Energy Security and Net Zero. As part of this,
environmental appraisals are submitted to
assess the potential impacts from undertaking
decommissioning activities at each field.
We undertake decommissioning outside
the UK in compliance with national statutory
requirements. In circumstances where
these are not in place, we apply the same
standards we follow in the UK.
Performance
In 2024, we removed and recycled the
Mimas and Tethys satellite platforms in the
UK Southern North Sea, achieving a recovery
rate of 99.99 per cent and 99.97 per cent
respectively. We also removed a significant
amount of subsea infrastructure and
implemented seabed remediation at the
MacCulloch oilfield in the UK, which ceased
production in 2015 and is in the final stages
of its 10-year decommissioning plan.
We consider impacts on biodiversity as
part of our environmental impact
assessments. We use the results of these
assessments to identify and manage the
actions we can take to lower our impact. In
2025, we will develop a biodiversity policy
and plan to further assess and manage
our biodiversity impacts across our
recently enlarged portfolio of operations.
We are also working to increase scientific
understanding of marine environments.
Biodiversity and ecosystems
For example, we are supporting a joint
industry programme, called INSITE, which
is examining the effects of man-made
structures on the ecology of the UK North
Sea. The programme was established in
2014 between the scientific community
and industry. The expected programme
outcomes include data on the environmental
effects of man-made structures that can be
used to inform decommissioning strategies
to support decision-making around
individual asset decommissioning.
53
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
2024
2023
2022
1.5
1.5
1.0
2024
2023
2022
5.5
6.3
3.9
P
R
I
O
R
I
T
I
S
I
N
G
S
A
F
E
T
Y
R
E
D
U
C
I
N
G
O
U
R
I
M
P
A
C
T
O
N
T
H
E
E
N
V
I
R
O
N
M
E
N
T
S
U
P
P
O
R
T
I
N
G
O
U
R
S
T
A
K
E
H
O
L
D
E
R
S
OUR
SUSTAINABILITY
APPROACH
SUSTAINABILITY REVIEW
CONTINUED
By building strong relationships
and engaging openly with
our employees, suppliers, the
communities in which we work,
regulators, investors and other
stakeholders, we can create
long-standing benefits.
OTHER RELEVANT PAGES
GOVERNANCE
PAGE 70
ENGAGING WITH OUR STAKEHOLDERS
PAGE 14
3,014
Employees
(2023: 1,716)
1,199
Graduate applications
(2023: 1,180)
We are committed to upholding
the highest ethical and governance
standards. This includes ensuring
equal opportunities for all, respecting
human rights, nurturing positive
relationships with our suppliers, and
ensuring risks in our business and
value chain are identified, monitored
and mitigated.
HOWARD LANDES
GENERAL COUNSEL
Charitable donations
$ million
Economic value created
$ billion
Focus areas in 2024
Generating and distributing value to
our stakeholders, including our local
communities and supply chain
Monitoring our Group-wide controls
for governance and business ethics
Promoting a diverse and inclusive
work environment
Protecting worker welfare across
our supply chain
SUPPORTING OUR
STAKEHOLDERS
54
Harbour Energy plc
Annual Report & Accounts 2024
Social metrics
1
2024
2023
2022
Total workforce (number)
2
3,407
2,082
2,221
Total employees (number)^
3,014
1,716
1,824
Gender balance
Total employees^
Male (per cent)
73
75
74
Female (per cent)
27
25
26
Senior management
3
Male (per cent)
76
78
77
Female (per cent)
24
22
23
Leadership Team
4
Male (per cent)
67
60
75
Female (per cent)
33
40
25
Board^
Male (per cent)
67
60
67
Female (per cent)
33
40
33
Hours spent on employee development training
67,213
89,790
75,689
Global engagement survey staff participation (per cent)
5
N/A
85
84
Employees covered by a collective bargaining agreement (per cent)
35
24
26
Employees receiving performance reviews (per cent)
6
100
100
100
New employees recruited externally (number)
226
81
228
Graduate applications (number)
1,199
1,180
880
Employee turnover (per cent)
7
7
11
7
Reported human rights abuses/violations of our human rights statement
0
0
0
Significant negative human rights or labour rights impacts identified
in our supply chain (number)
0
0
0
Charitable donations ($ million)
8
1.5
1.0
1.5
Economic value created ($ billion)
6.3
3.9
5.5
Economic value distributed ($ billion)
4.8
2.6
3.3
1
Metrics reflect year end data as at 31 December 2024.
2
Workforce includes employees and direct contract staff.
3
This includes managers from team leader level and above.
4
This includes the CEO, COO, CFO, Chief HR Officer, EVPs and the General Counsel.
5
Due to the organisational changes in 2024, a global employee engagement survey was not conducted.
See page 58 for more information on the pulse survey.
6
This includes employees from legacy Harbour only.
7
Turnover is the number of departures divided by employees at the end of the reporting period.
8
Charitable donations include sponsorships and donations.
^
Indicates metrics that have undergone limited external assurance by Ernst & Young LLP.
Governance and
business ethics
Approach
We are committed to upholding the highest
standards of governance and ethical conduct.
Please see pages 70 to 117 for information
on how we comply with the UK Corporate
Governance Code.
We have zero tolerance for bribery, corruption,
fraud, human rights violations including forced
labour and child labour, and discrimination,
bullying and harassment. Our commitment
to ethical conduct is underpinned by policies
and standards, including our code of conduct,
business partner code of conduct, people
policy, global anti-corruption standard,
human rights statement, fraud policy and
sanctions policy.
We encourage our employees and people
working with us to speak up if they have a
concern, including about ethical misconduct.
They can do so using a whistleblowing hotline,
which operates 24 hours a day, seven days a
week, provided by an independent company,
Safecall. Translation services are available
to enable people to report concerns in their
first language. We do not tolerate retaliation
against anyone raising a concern in good faith.
Our Board and Leadership Team are
responsible for monitoring and managing ethics
and compliance activities across Harbour.
We harmonised governance and ethics
standards across our enlarged business
in 2024, and a programme of mandatory
training is in place to ensure employees
understand and comply with our standards.
We also made progress against improvement
actions identified in an independent
assessment of our compliance programmes
that was conducted in 2023. This included
establishing an ethics and compliance team
headed by our Chief Ethics and Compliance
Officer; improving the visibility and
accessibility of our whistleblowing hotline;
and introducing mandatory ethics and
compliance training for all line managers.
We also raised awareness of ethics and
compliance with our employees and held
our first Business Unit compliance day in
Indonesia, which focused on maintaining
a culture of integrity and embedding ethics
and compliance.
Ethical business conduct is central
to how we operate and do business.
Our approach to how we do business
is underpinned by our refreshed values:
We care, We work together, We aim
high, We deliver (see pages 18 and 19).
In 2024, we launched a ‘Values in Action’
campaign to help embed our values
into everyday workplace interactions.
The campaign’s initial focus was on
constructive performance feedback
conversations. This was a topic that
employees identified as a priority in our
2023 employee engagement survey.
Participants attended a series of
workshops aimed at fostering a
culture of feedback, collaboration and
continuous improvement. See page 58
for more information on how we engage
with our employees.
Our values in action
Performance
In 2024, we identified zero substantiated
allegations of wrongdoing as set out in
our code of conduct and whistleblowing
procedure. All alleged breaches of process
were investigated, and appropriate corrective
action was taken in response to the findings
where relevant. We did not terminate any
contracts with external business partners
due to breaches of our code of conduct
in 2024. In addition, we were not subject
to any significant fines or non-monetary
sanctions for legal or regulatory breaches,
nor were we subject to any legal actions
relating to business ethics, corruption or
anti-competitive behaviour.
Looking ahead
In 2025, we will:
Promote our whistleblowing channels
in our workforce and supply chain
Hold an annual compliance day in each
of our Business Units
55
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUSTAINABILITY REVIEW
CONTINUED
Responsible supply
chain management
Approach
Our suppliers help us maintain safe and
efficient operations, execute new projects and
create local employment opportunities. We
set out our expectations and commitments to
our suppliers in our supply chain policy. This
includes requirements on ethical conduct;
on health, safety, environment and security;
and our commitment to work with suppliers
on sustainable solutions.
In 2024, we issued a business partner code
of conduct, setting out our expectations that
our partners and suppliers will adhere to the
same ethical standards as Harbour. We also
introduced a third-party screening platform
to assess suppliers before agreeing to work
with them. The platform identifies issues such
as sanctions, human rights abuse, criminal
convictions and any adverse media reports.
Where a supplier is assessed as high risk or
an issue is identified, the potential supplier
completes a more detailed questionnaire,
and we then review the policies and practices
the supplier has in place to mitigate any risk.
In an effort to deepen supplier collaboration
and capture efficiencies, in 2024 we achieved
a 40 per cent reduction in the number of
contracts. Following the Wintershall Dea
transaction, we are leveraging the expanded
scale of our business to further simplify
and standardise our contracting processes.
Performance
In 2024, we identified zero significant negative
environmental, human rights or labour rights
impacts in our supply chain. In addition to
using our third-party screening platform, we
conducted an onsite audit of a key contractor
in Malaysia to identify potential human rights
impacts. This was led by an independent
human rights organisation which interviewed
representatives from the contractor company
and its sub-contractors. The audit found that
the contractor had strong systems to manage
employment conditions. It also identified areas
for improvement related to sub-contractor
working hours and recruitment processes. We
will work with the contractor in 2025 to monitor
progress against agreed remedial actions.
During 2024, 68 per cent of our new
supplier contracts were with locally owned
and operated entities. An additional 22 per
cent of new contracts were signed with local
entities owned by foreign parent companies
while the remaining 10 per cent were with
foreign companies.
Looking ahead
For 2025, we will look to deepen our
collaboration with key contracting partners
across our operations, aiming to prioritise
safety, drive commercial efficiencies,
optimise our cost base and to seek
innovative and sustainable solutions
to mitigate supply chain risks.
We will continue to audit our key contractors,
applying a risk-based approach, and
integrate our Group-wide supply chain
management processes.
Human rights
Approach
Harbour’s activities have the potential
to affect human rights and worker welfare
directly through our operations, and indirectly
through our supply chain, joint venture
partners and third parties. We respect
individual human rights as set out in the
United Nations Declaration of Human
Rights and the core conventions of the
International Labour Organization.
Our code of conduct, values and related
policies, including our human rights statement,
supply chain policy, sustainability policy and
people policy, reflect our commitment to uphold
human rights, protect worker welfare standards
and prevent modern slavery from taking place
in either our business or our supply chain.
Our due diligence processes to manage human
rights risks include screening third parties,
engaging with contractors and suppliers,
providing training and conducting audits.
Performance
We continued to raise awareness of potential
modern slavery and worker welfare risks that
we could face in our business and the supply
chain. We engage with key contractors to
discuss their approach to sub-contractors
and to identify whether any of their business
activities pose human rights risks.
In 2024, there were no reported human
rights abuses/violations of our human
rights statement. For more information, see
our modern slavery and human trafficking
statement on our website.
Looking ahead
In 2025, our priorities include:
Commissioning an independent review
of human rights risks in our business and
supply chain
Reviewing our human rights and
environmental due diligence processes in
our business and supply chain in preparation
for compliance with upcoming regulation
Value generation
and distribution
Approach
Our ability to create long-term sustainable
value for our shareholders relies on our
ability to deliver tangible and lasting benefits
to all stakeholders. This supports our
social licence to operate and underpins
the long-term success of our business.
Our stakeholders include:
host governments, which grant us oil,
gas and CCS licences and regulate
our activities;
local communities, which grant us our
social licence to operate; and
employees, whose skills and experience
underpin our ability to create value.
Our activities directly support
socio-economic development for:
suppliers and contractors, including
locally based companies;
our employees, including salaries and
benefits, and career development;
the capital markets, including shareholder
dividends, share buybacks and interest
on debt;
local communities, including social
investment and job opportunities; and
host governments, including taxes, royalties
and other payments (see pages 199 to 201
for UK Government payment reporting).
Tax
We are committed to transparency on tax
matters and adhere to the requirements
of globally recognised guidelines such as
the Reports on Payments to Governments
Regulations, the Extractive Industries
Transparency Initiative, and the country-
by-country reporting requirements of
the OECD and the EU Country-by-Country
Reporting Directive.
We engage on tax matters via industry
groups, such as the UK Oil Industry Taxation
Committee, the Association of British
Independent Exploration Companies and
Offshore Energies UK’s Fiscal Policy Forum.
Public policy and government relations
We engage with host governments and
policymakers in the countries where we
work. We also participate in working groups,
taskforces and consultations on public
policy. We do so directly and through our
membership of trade, industry and other
professional associations.
56
Harbour Energy plc
Annual Report & Accounts 2024
Employee practices
Approach
We aim to attract and retain a high calibre
and diverse workforce, so our recruitment
and employment practices are designed
to engage, develop, retain and reward our
employees, including by providing an
inclusive working environment.
We offer comprehensive pay and benefit
packages and conduct regular benchmarking
to ensure we remain competitive in both
local and global markets.
We support our employees in developing
their careers. In 2024, employees spent
67,213 hours on formal learning (2023:
89,790). This includes programmes on
technical and leadership skills, as well as
training on health, safety, environment,
security, cyber security, diversity, equity
and inclusion, and ethics and compliance.
Following the acquisition of the
Wintershall Dea assets, we are working to
integrate training tracking systems across
our Business Units to enhance consistency
in how learning is captured and reported.
We use our annual workforce planning
process to identify the future needs of our
organisation. In 2024, 13 people joined
our graduate programmes in the UK and
Indonesia. In addition, 16 participants from
Wintershall Dea’s young professionals’
development programme transitioned to
Harbour following the transaction, continuing
their assignments across international
locations. Six of these individuals completed
the programme in 2024 and are continuing
their careers within our organisation.
We engage our workforce in a variety of ways,
including through face-to-face meetings,
‘lunch and learns’, surveys, virtual events
and digital channels. The CEO, joined by
other senior leaders, hosts monthly town
halls globally which include a live Q&A
section. We encourage our employees to
engage on topics that matter to them through
our employee-led networks, which include
DE&I groups (see overleaf), as well as global
and country staff forums (see page 80).
We carry out all engagements in accordance
with our applicable policies. We forbid the
use of our funds or resources for any political
campaign, party or candidate, or any such
affiliated organisations. See page 14 for
more information on our engagement with
government and regulatory stakeholders.
Performance
In 2024, the economic value we created
increased by 62 per cent year on year
to $6.3 billion (2023: $3.9 billion). The
economic value we distributed increased
to $4.8 billion (2023: $2.6 billion), of
which $1.5 billion constituted tax payments
(2023: $438 million).
Looking ahead
In 2025, we will:
Hold a capital markets update to provide
investors and analysts with information on
our strategy and capital allocation priorities
Continue to engage with government
and regulatory stakeholders on matters
including the importance of a stable
fiscal environment to enable investment
in future production that supports jobs,
energy security and the economy
Community investment
Approach
We believe that we can bring a range of positive
benefits to the societies where we operate,
including through our social investments.
In assessing social investment programmes,
we consider local community needs and
how the programmes will contribute to the
UN Sustainable Development Goals.
Our social investment and charitable donations
standard sets out our expectations, including
our ethics and compliance requirements.
We focus our support in the areas of
education, affordable energy, health and
safety, and the environment. We encourage
our employees to contribute to their local
communities, including through volunteering.
Performance
In 2024, we provided $1.5 million in
community investments; this includes
sponsorships and charitable donations.
In the UK, we supported The River Dee
Trust’s nature restoration projects to reduce
flood and drought impacts and protect
biodiversity. We also backed the East
Grampian Coastal Partnership’s Turning the
Plastic Tide Project to promote sustainable
coastal management. In London, our
staff volunteered with The Passage,
a charity close to our head office that
provides services to homeless people.
The volunteers helped serve meals to
more than 150 people and we collected
clothes and food donations for the charity’s
Christmas appeal.
In Indonesia, we are supporting local
communities close to our operations in the
Anambas Islands. In 2024, we planted
more than 1,000 mangrove saplings at
Pulau Harapan to improve biodiversity and
protect the local environment from storm
damage. We also participated in a beach
clean-up with local government and
community representatives. In addition
to collecting waste, the initiative raised
awareness about reducing plastic waste
and protecting endangered species.
We also helped raise awareness of plastic
waste in Egypt, participating in an initiative
organised by social enterprise, VeryNile, to
collect plastic waste from the Nile. VeryNile
works with local fishermen and women to
encourage the collection of plastic waste
and provides access to health, education
and employment.
In Germany, we are supporting a seal centre
that rehabilitates vulnerable seal pups who
have been separated from their mothers so
they can be released back into their natural
habitat in the Wadden Sea.
In support of our aim to promote education,
we donated computer and IT equipment to a
technology college in Mexico and participated
in workshops with local schools to provide
career advice and guidance on health and
disease prevention.
Looking ahead
In 2025, our priorities include:
Continuing to develop community investment
programmes that are tailored to local needs
Developing a global philanthropy strategy
for community investment
Progressing our partnership with the
humanitarian landmine clearance
organisation, The HALO Trust
57
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
SUSTAINABILITY REVIEW
CONTINUED
Performance
Staffing our newly expanded organisation
was a key focus for us in 2024, with the
acquisition of the Wintershall Dea assets
and subsequent onboarding of nearly 1,300
new employees. We prioritised recruitment
from Wintershall Dea’s corporate centre
to fill vacancies in our headquarters and
worked with the local works councils.
The larger and more geographically diverse
portfolio also created development
opportunities for existing Harbour employees.
In Q4, we carried out an employee engagement
pulse survey to find out how people felt about
the organisational changes following the
Wintershall Dea transaction. A total of 74 per
cent of employees participated. Health and
safety was the highest scoring area and the
survey also found that employees have a
good understanding of how the acquisition
aligns with Harbour’s strategic goals. The
results also highlighted improvement areas,
with commitment and advocacy being lower
scoring areas, and we are developing local
and global initiatives to address this.
Looking ahead
In 2025, our priorities include:
Evolving our graduate programme offering
Conducting a global employee
engagement survey
Maturing our career development process
Diversity, equity and
inclusion (DE&I)
Approach
We want all our employees to feel valued
and supported at work. To foster an inclusive
workplace, we have employee-led networks
in areas including gender, disability, culture,
neurodiversity, LGBTQ+, menopause,
STEM Ambassadors and early careers. The
networks, which each have a Leadership
Team sponsor, provide a space to discuss
ideas and obtain support. They also support
our global recruitment strategy, helping us to
attract prospective employees, and provide
advice to the business. For example, following
feedback from the gender balance network,
we implemented enhanced family friendly
policies in the UK in 2024, including leave
for employees undergoing fertility treatment
and carer’s leave.
We recruit, retain and promote staff based
on competence and regardless of age, sex,
disability, gender, marital status, maternity,
neurodiversity, race, religion and belief, and
sexual orientation.
Our commitment to building a diverse, equitable
and inclusive environment is underpinned by
our values, code of conduct, people policy, and
diversity, equity and inclusion policy. Our global
head of DE&I leads the development of our
long-term DE&I strategy.
We launched inclusive leadership training to
develop our supervisors’ skills and practices
in fostering an inclusive and supportive
environment. The training was held in the UK
and Indonesia in 2024, and we plan to extend
the programme to other countries in 2025.
At the recruitment stage, we ensure there
is diverse representation in our candidate
selection panels and shortlists. We seek
diverse candidates by offering job sharing
roles, hiring individuals who have taken
extended career breaks, and advertising
our vacancies across a range of job
boards (including veterans, gender groups,
ethnically diverse communities and
non-league table universities).
We have set DE&I ambitions. By 2030,
we are aiming for:
40 per cent of our Leadership Team
from diverse backgrounds (gender and/
or ethnicity)
30 per cent of women in senior
management roles/across the workforce
40 per cent of our graduates being female
In 2024, our DE&I scorecard was incorporated
into Board and Leadership Team meetings
to increase visibility of our performance and
targets. The scorecard also included a new KPI
to track gender diversity across our recruitment
process, with the aim of increasing the
percentage of new recruits that are women.
Performance
While we saw a slight increase in the number
of women in both senior management roles
and our total workforce in 2024, diversity
in our Leadership Team remained flat year
on year and the percentage of women
graduates decreased:
Diversity in our Leadership Team was
33 per cent (2023: 33 per cent)
24 per cent of our senior managers were
women (2023: 22 per cent). Women
made up 27 per cent of our workforce
(2023: 25 per cent)
29 per cent of our graduates were women
(2023: 37 per cent)
We are assessing improvement opportunities
as we work towards meeting our 2030
DE&I ambitions.
For information on our Board diversity please
see page 81.
We continued our practice of analysing
promotion rates, salaries and employee
performance metrics to ensure gender
equity. In the UK, we publish a gender pay
gap report in line with government regulation.
Please see our website to view the report.
We earned several DE&I accreditations
during the year, including:
Recognition as a Living Wage Employer
by the UK Living Wage Foundation
Level 2 accreditation as a Disability
Confident Employer by the UK Government
Three of our employees were named
among the 50 most influential women in
the energy sector in Mexico by Petroleum
& Energy magazine
We work with external organisations such
as the Women’s Engineering Society, STEM
Learning UK, Institute of Neurodiversity and
the Association for Black and Minority Ethnic
Engineers. In 2024, we also collaborated
with Women in Mining and Energy Indonesia,
an initiative that aims to promote gender
equality in the sector.
To encourage young people to consider
careers in science, technology, engineering
and maths we participate in school visits
and partner with educational institutions.
During the year, we visited 20 schools,
reaching 1,477 children. To support female
students starting their engineering careers,
we established a women in engineering
scholarship programme at Robert Gordon
University in the UK in 2024. We also
awarded scholarships to two female
engineering students in Indonesia and two
engineering undergraduates in the UK.
Looking ahead
In 2025, our priorities include:
Targeted support to address gender
and ethnic underrepresentation at mid
to senior management levels
Providing additional DE&I training across
the organisation
Rolling out global inclusive recruitment
standards to our new Business Units
58
Harbour Energy plc
Annual Report & Accounts 2024
Non-financial and sustainability information statement
Non-financial measures are an important part of our business and the Board is committed to acting responsibly and working with our stakeholders to manage
the impact of our activities. The table and cross references below are produced in compliance with sections 414CA and 414CB of the Companies Act 2006.
Reporting
requirement
Internal policies
and standards
External frameworks
and standards
Information on our business
impacts and outcomes
Safety matters
Code of conduct
Corporate major accident
prevention policy (CMAPP)
HSES policy
European Sustainability Reporting Standards (ESRS)
Global Reporting Initiative (GRI) Standards
International Association of Oil & Gas Producers (IOGP)
ISO 45001 standard
Pages 40 to 43
Environmental matters
Code of conduct
HSES policy
Sustainability policy
ESRS
GRI Standards
ISO 14001 standard
IOGP
UN Global Compact
Pages 44 to 53
Climate change
HSES policy
Sustainability policy
ESRS
Task Force on Climate-related Financial Disclosures
UN Sustainable Development Goals (SDGs)
Pages 45 to 53
Employees
CMAPP
Code of conduct
DE&I policy
People policy
Sustainability policy
ESRS
GRI Standards
UN Global Compact
UN SDGs
Pages 57 to 58
Human rights
Code of conduct
DE&I policy
Human rights statement
Supply chain policy
Sustainability policy
Whistleblowing procedure
ESRS
UN Declaration of Human Rights and International Labour
Organization’s (ILO) core conventions
UN Global Compact
UN Guiding Principles on Business and Human Rights
UN SDGs
Voluntary Principles on Security and Human Rights
Page 56
Social matters
Code of conduct
Sustainability policy
ESRS
UN SDGs
Pages 54 to 58
Anti-corruption and
anti-bribery
Code of conduct
Tax policy
Whistleblowing procedure
ESRS
UN Global Compact
Page 55
Business model
description
N/A
N/A
Pages 12 and 13
Principal risks and
uncertainties
Risk management policy
ISO 31000 risk management system standard
Pages 64 to 69
Non-financial KPIs
Sustainability reporting
procedure and guideline
ESRS
GRI Standards
Pages 20, 41, 45, 50,
52, 53, 55 and 58
TCFD index
We consider our Task Force on Climate-related Financial Disclosures on pages 46 to 53 to be compliant with the disclosure requirements of section 414CB
of the Companies Act 2006.
Recommendation
Recommended disclosure
Disclosure level
Reference
1. Governance
Disclose the organisation’s
governance around
climate-related risks and
opportunities
a) Describe the Board’s oversight of climate-related risks and opportunities
Full
Sustainability review: page 46
b) Describe management’s role in assessing and managing climate-related
risks and opportunities
Full
2. Strategy
Disclose the actual and potential
impacts of climate-related risks
and opportunities on the
organisation’s businesses,
strategy and financial planning
where such information is material
a) Describe the climate-related risks and opportunities the organisation
has identified over the short, medium and long term
Full
Sustainability review: pages 48 to 49
Principal risks: page 69
Viability statement: page 63
Note 2 to the financial statements:
pages 137 to 142
b) Describe the impact of climate-related risks and opportunities on the
organisation’s businesses, strategy and financial planning
Full
c) Describe the resilience of the organisation’s strategy, taking into
consideration different climate-related scenarios, including a 2°C
or lower scenario
Full
3. Risk management
Disclose how the organisation
identifies, assesses, and
manages climate-related risks
a) Describe the organisation’s processes for identifying and assessing
climate-related risks
Full
Sustainability review: pages 46 to 50
Principal risks: page 69
b) Describe the organisation’s processes for managing climate-related risks
Full
c) Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organisation’s overall
risk management
Full
4. Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where such
information is material
a) Disclose the metrics used by the organisation to assess climate-related
risks and opportunities in line with its strategy and risk management
process
Full
Sustainability review: pages 45,
50 and 52
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse
gas (GHG) emissions, and the related risks
Full
c) Describe the targets used by the organisation to manage climate-related
risks and opportunities and performance against targets
Full
59
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK MANAGEMENT
The Board is responsible
for establishing and
maintaining an effective
risk management
framework.
ALAN FERGUSON
CHAIR OF THE AUDIT AND RISK COMMITTEE
Risk management framework
We believe the effective management of risk
remains critical to the successful execution
of our strategy. It also underpins how we
safeguard and protect our people, assets,
the communities with whom we interact, the
environment and our reputation. We further
believe it supports our purpose and helps
us stay true to our values.
Our risk management and internal control
systems (our risk management framework)
are designed to determine the nature and
extent of the risks the company is willing to
take, or consciously accept, to achieve its
strategic objectives. The framework is also
designed to provide an appropriate level
of assurance as to whether the company
is managing these risks appropriately and
has an effective system of internal control.
The framework comprises:
A risk management process through which
we define our appetite (or tolerance) for
risk, and identify, assess, treat, monitor
and communicate risk in the business
An internal control system to assist
in the management of risk given our
defined appetite
An assurance model to check whether
the controls in place are appropriate
and effective given our defined appetite
The framework can provide only reasonable,
and not absolute, assurance that the
risks facing the business are being
appropriately managed.
Risk governance
The Board is responsible for determining
the nature and extent of the principal risks
the company is willing to take to achieve its
long-term strategic objectives, and for monitoring
the effectiveness of the risk management
framework. To facilitate this, the Board has
assigned the oversight of certain principal risks
to the most relevant Board committees. For
example, the HSES Committee monitors the
management of health, safety, environmental
and physical security risks and the Audit and
Risk Committee monitors the management of
cyber and information security risk. The Audit
and Risk Committee is also responsible for
monitoring the effectiveness of the risk
management framework on behalf of the Board.
The Leadership Team sets the tone for
Harbour’s risk management culture and
is responsible for ensuring that the most
significant risks facing the business are
identified and are managed in line with
the appetite or tolerance for risk agreed
with the Board.
Responsible
risk management
is essential to executing our strategy
60
Harbour Energy plc
Annual Report & Accounts 2024
C
O
N
T
I
N
U
O
U
S
L
E
A
R
N
I
N
G
C
O
N
T
I
N
U
O
U
S
I
M
P
R
O
V
E
M
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N
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MONITOR
AND REVIEW
RECORD AND
COMMUNICATE
RISK TREATMENT
CONTEXT
RISK
ASSESSMENT
Individual members of the Leadership Team
are responsible for overseeing the risks that
fall within their business area, with the most
significant management risks recorded in
our Leadership Team risk register. Individual
Business Unit and functional managers
own and manage risk on a day-to-day basis,
undertaking activities in compliance with
company standards and procedures.
Internal audit undertakes a risk-based audit
programme on behalf of the Board to assure
the effectiveness of risk mitigation activities,
as described in the ‘Reasonable assurance’
section on page 62.
Risk management process
We face various risks that could result in
events or circumstances that negatively
impact the company’s business model, 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 that have not yet materialised, or are
not reasonably foreseeable. In conducting risk
assessments, the company considers the
level of the risk in terms of the likelihood that
a specific risk event will occur and the severity
of the consequences of the event.
For known risks facing the business, the
company seeks to align the level of the
risk with the appetite or tolerance for risk
set by the Board. According to the nature
of the risk, Harbour can choose to accept
or take risk, treat risk with mitigating actions,
share or transfer risk to third parties, or
remove risk by ceasing certain activities. In
particular, we aim to manage health, safety,
environmental and security risks to a level as
low as reasonably practicable. Additionally,
we take a zero tolerance stance to fraud,
bribery, corruption and the facilitation of tax
evasion. This risk management process is
illustrated above.
Principal and emerging risks
The Board carries out an assessment of the
principal risks facing the company twice during
the year. In deciding which risks are principal
risks, the Board considers Harbour’s stated
strategy together with events or circumstances
that might threaten its strategy and business
model, future performance, financial position,
liquidity and reputation.
In doing so, the Board considers the most
significant risks identified by the Leadership
Team. A description of the principal risks,
together with an overview of how each risk is
being managed, is provided on pages 64 to 69.
The Board also reviews the emerging risks
facing the business and the procedures in
place to identify and manage them. The
Board defines an emerging risk as a risk not
currently included as (or fully reflected within)
one of the identified principal risks, and where
the scope, impact and likelihood are still
uncertain, but which could have a material
effect on the company if it was to occur in
the short or medium term. The procedures to
identify and manage emerging risks include
a review of the most significant management
risks and independent perspectives on the
global risk environment. The Board then
considers whether any should be reflected
within the principal risks.
Internal control
Harbour’s internal controls are intended to
assist in the management of risk given our
defined appetite or tolerance for risk. The
internal controls consist of the company’s
policies, standards, procedures and guidelines
that together comprise the company’s
business management system and govern
all business activity. The internal controls
are underpinned and implemented through
knowledgeable and experienced people
and supported by our information systems.
Risk management process
The company follows a structured process to identify, assess, treat, monitor and communicate the risks which may prevent
it from achieving its strategic objectives.
Top-down
Oversight and monitoring by
the Board and its committees
Bottom-up
Ongoing identification, assessment and
treatment of risk across the business
Context
The strategic objectives, purpose
and values of the company and the
appetite or tolerance for risk set by the
Board contribute to the overall context.
Record and communicate
Risks and measures taken to treat
them are communicated through
regular business reviews, including
those held by the Leadership Team.
Risk treatment
Depending on the nature of the risk,
the company may choose to accept
or take risk, treat risk with mitigating
actions, share or transfer risk to third
parties, or remove risk by ceasing
certain activities.
Risk assessment
Risks are identified and analysed
across the company as part of ongoing
business reviews. Risks are analysed
based on the likelihood of a risk event
occurring and the impact of the
event if it was to occur.
Monitor and review
Risks and treatment measures are
monitored through regular business
reviews, audits and other sources of
assurance. These reviews are used
to identify changes in the nature or
level of the identified risks, to identify
emerging risks, and to assess the
effectiveness of control measures
in the context of the Board-agreed
appetite or tolerance for each risk.
61
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Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
RISK MANAGEMENT
CONTINUED
During the year, the company continued
to mature its internal financial controls
framework and commenced integration
of Harbour’s control framework across the
newly acquired Wintershall Dea assets.
Following the publication of updates to the
UK Corporate Governance Code in 2024,
the company also commenced preparations
to meet the expanded future UK Code
requirements related to material control
effectiveness.
Reasonable assurance
The adequacy of the internal controls
depends on their design and operating
effectiveness.
On completion of the Wintershall Dea
transaction, the company put in place a
new corporate organisation to support the
management of the enlarged group. This
included continuing to develop the second
line coverage of key risk areas as part of
embedding the ‘three lines’ assurance
model across the company. The model is
designed to provide senior management
and the Board with reasonable assurance
that the most significant risks facing the
business are being appropriately managed
and that the risk management framework
is effective. First line assurance is provided
by line managers who are responsible
for implementing and operating controls.
Second line assurance areas monitor the
effectiveness of controls for certain key risk
areas, such as HSES, cyber and information
security, supported by a programme
of in-house audits agreed with senior
management. Significant findings from
these audits are reported to management.
Third line assurance is provided by the
internal audit function, the external statutory
auditors and certain other independent
assurance providers. Internal audit is led by
the SVP Internal Audit, who reports directly
to the Chair of the Audit and Risk Committee
and to the CFO on a day-to-day basis. The
function undertakes a programme of audits
agreed and reviewed by the Audit and Risk
Committee. A summary of findings from
each internal audit is reported to the Audit
and Risk Committee, and to other Board
committees where appropriate. Internal
audit then monitors the implementation
of agreed actions and reports progress
to the Audit and Risk Committee.
Harbour maintains an ‘assurance map’ that
sets out key internal and external sources of
assurance in place against each principal risk.
This map allows management and the Board to
judge the adequacy of the assurance measures
in place for each principal risk and to strengthen
them if required. Information from this map
will be incorporated into Harbour’s audit and
assurance policy in 2025. The external auditors
report to the Audit and Risk Committee on
internal controls based on the audit work
observations. Where deficiencies have been
identified, improvement recommendations are
provided to management for consideration.
The Board committees commissioned a
targeted programme of management-led
presentations to enhance understanding and
alignment on risk matters assigned to them,
examine the levels of assurance provided and
to consider key outcomes from assurance
activity. These presentations are summarised
by the relevant committee chair when
reporting back to the full Board. For more
information, please see page 70.
Monitoring and effectiveness of the
risk management framework
The Board is responsible for monitoring
the company’s overall risk management
framework and for reviewing its effectiveness.
The annual review of the overall effectiveness
of Harbour’s risk management framework
has been carried out by the Audit and Risk
Committee on behalf of the Board. In
conducting its review, the Committee sought
perspectives and assurances from members
of the Leadership Team which take the form of
confirmation statements from the executives
to the Board. The Committee considered the
design of the risk management framework
across Harbour and the most significant risks
to achieving our strategic objectives. The
review also considered any significant control
deficiencies, themes emerging from internal
audit findings and the status of remedial
actions taken. The review noted the continued
maturation of the internal financial control
framework, as part of the company’s
continued preparation to meet the expanded
future UK Code requirements related to
material control effectiveness, and the
controls to prevent material fraud.
Taking into account their assessment
of the management of the risks faced or
materialised during the year, the remediation
status of control failures or assurance
findings and the nature of the Leadership
Team assurances received, the Board
concluded that the risk management
framework is effective.
Alan Ferguson
Chair of the Audit and Risk Committee
62
Harbour Energy plc
Annual Report & Accounts 2024
Viability statement
In accordance with the provisions of the UK
Corporate Governance Code, the Board has
assessed the prospects and the viability of
the Group and the company over a longer
period than the 12 months required by the
going concern provision. For the assessment
period, the base case used is consistent with
the forecast as used for our going concern
assessment as disclosed on page 37. As part
of this assessment, we considered the
principal risks faced by the Group, relevant
financial forecasts and sensitivities, and
the availability of adequate funding
particularly in relation to energy transition
and climate change.
Assessment period
The review covered a period of three years
from 31 December 2024 (the forecast
period), which was selected for the
following reasons:
at least annually, the Board considers
the Group’s corporate operating
cycles, business plan projections
(the projections) and debt facility
structures over a three-year period;
within the three-year period, market
forward price forecasts are used in
the forecast. Given the lack of forward
liquidity in oil and gas markets after
this initial three-year period, we rely on
our own internal estimates of oil and
gas prices without reference to liquid
forward curves; and
the Group is not currently committed to
any major capital expenditures beyond
the three-year period.
Review of principal risks
The Group’s principal risks and uncertainties,
set out in detail on pages 64 to 69, have been
considered over the period. Whilst all the risks
identified could have an impact on the Group’s
performance, the specific risks which could
materially impact the Group’s financial position
have been determined to be:
commodity price exposure;
operational performance;
capital programme and delivery; and
financial discipline.
To assess, either directly or by proxy, the
potential impact of these principal risks
over the forecast period, the Group has
run downside scenarios, where oil and gas
prices are reduced by 20 per cent plus
total production volumes by 10 per cent,
throughout the entire forecast period.
These downside scenarios were performed
individually and in combination alongside a
reverse stress test to determine if the Group
is forecast to have sufficient liquidity
and covenant compliance headroom.
The potential impact of each of the Group’s
other principal risks on the viability of the
Group during the forecast period, should that
risk arise in its unmitigated form, has been
assessed. The Board has considered the risk
mitigation strategy for each of the other
principal risks and believes they are sufficient
to reduce the impact of each risk such that
it would be unlikely to impact the Group’s
viability during the forecast period.
Specifically, the risk associated with energy
transition and climate change that could have
a potential impact on viability outside the
assessment period is reported in note 2 of
the financial statements, pages 137 to 142.
Review of financial forecasts for the
forecast period
The projections for the viability of the Group
over the forecast period are based on:
Base case assumptions
Production and expenditure forecasts
on an asset-by-asset basis;
Crude oil prices and gas prices that are
used for impairment testing adjusted
for the company’s hedging programme
position at year end 2024. Refer to note 2
in the financial statements page 138); and
The financial covenant and liquidity tests
for both the going concern and viability
statement periods associated with the
Group’s borrowing facilities.
Severe but plausible downside analysis
In line with the identified principal risks
that could impact the financial viability
of the Group, sensitivity analyses were
prepared under the severe but plausible
downside sensitivity scenario to reflect
the combined impact of reductions in
Brent crude and gas prices by 20 per
cent plus a 10 per cent reduction in the
Group’s production, throughout the
entire forecast period. The sensitivity
test demonstrated that neither of the
two RCF covenants were breached
within the assessment period, however
liquidity headroom runs out within the
viability period in late 2027. This is prior
to considering any mitigating actions
that are available to the company.
Reverse stress tests
Specific reverse stress tests have been
performed reflecting reductions in each
of the commodity price and production
parameters, prior to any mitigation
strategies, to determine the levels each
would need to reach to breach lending
covenants or financial liquidity headroom.
These reverse stress tests demonstrated
that the likelihood of a sustained
significant fall in commodity prices or
production over the entire assessment
period, which would be required to cause
a risk of funds shortfall or a covenant
breach, is remote.
Results and mitigating actions
The base case showed compliance with
both financial covenants; and
No breach of the covenants was forecast.
Management are confident of being able
to mitigate any liquidity reduction in the
plausible but severe downside scenario.
Potential mitigations include the ability to
control uncommitted capital programmes,
shareholder returns, additional hedging
and the assumption of replacing the
existing bonds upon maturity.
Conclusion
The directors’ assessment has been made
with reference to the Group’s current position
and prospects, the Group’s strategy and
availability of funding, the Board’s risk appetite
and the Group’s principal risks and how these
are managed, as detailed in the Strategic
report on pages 64 to 69. The directors have
also considered the mitigating actions within
their control in the event of these downside
scenarios. Therefore, the directors confirm that
they have a reasonable expectation that the
Group will continue to operate and meet
its liabilities, as they fall due, throughout the
three-year viability assessment period ending
31 December 2027.
63
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
PRINCIPAL RISKS
The principal risks which may
prevent the company from
achieving its strategic objectives
BOARD ASSESSMENT OF CHANGE IN UNMITIGATED RISK LEVEL SINCE 2023
Risk level
has increased
Risk level
remains stable
Risk level
has decreased
Risk has been
added this year
RISK DESCRIPTION
The company’s strategy is to create value by
building a global, sustainable, independent
oil and gas company through a combination
of organic growth and disciplined M&A,
underpinned by a clear purpose and strong
values. There are risks to effectively
implementing this strategy. Factors such as
economic downturns, regional conflicts, political
instability and/or the pace of the energy
transition could lead to prolonged declines
and/or volatility in commodity prices, hindering
access to capital. The company may be unable
to maintain sufficient leadership and
organisational capability to execute the strategy
and manage the business effectively. Identifying
or executing attractive organic growth or M&A
opportunities could prove more challenging
than expected. Fulfilling our greenhouse gas
strategy may impact other aspects of the
strategy or vice versa. The company may
be slow to adapt to changes in the external
environment, for example with respect to
climate change and the energy transition.
Execution of the strategy:
failure to effectively implement the strategy
CHANGE IN RISK LEVEL
The unmitigated risk level is stable. Whilst the
Wintershall Dea transaction is another example
of the strategy in action and it has diversified
country risk, further strengthened the financial
health of the business and brought more organic
growth opportunities, the political environment
in some regions is challenging and stakeholder
expectations of the sector continue to evolve.
HOW THE RISK IS MANAGED
Regular Board review of the company
strategy and its execution, including market
developments, and the capability and capacity
of the Leadership Team
Leadership Team with a proven track record
of executing value-accretive, large-scale M&A
and organic growth projects
Organisation designed and resourced to
deliver the strategy, incentivised with a
competitive reward and benefits package,
and supported by a strong culture and values
Scalable organisation model and enterprise
management system to facilitate future growth
Capital deployment, growth, financial and
other key performance metrics agreed with
the Board and some feature in incentive
compensation
Corporate planning and M&A analyses
evaluated across a range of scenarios,
including consideration of the long-term
resilience of the strategy and portfolio
with respect to commodity prices, climate
change and the energy transition
Detailed due diligence of future M&A
opportunities undertaken, supported
by external expert advisers as needed
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company may face a major accident or
physical security incident resulting in personal
injury, property damage and/or environmental
harm. A serious incident could also significantly
impact production, impair financial performance
and tarnish the company’s reputation. The
business might be subject to punitive fines
and individual directors could face sanctions.
CHANGE IN RISK LEVEL
The Wintershall Dea transaction has
expanded the operated activity set of the
company and so the unmitigated risk level has
increased. The installed asset base continues
to age and requires continuous inspection
and maintenance. The recruitment of new
personnel to fill operational vacancies created
by retirements remains challenging in some
regions. The risk is actively managed to ensure
the mitigated risk level at the asset level is
stable or reduced.
Health, safety and environment:
risk of a major health, safety, environmental or physical security incident
HOW THE RISK IS MANAGED
Strong safety leadership culture, with Board and
senior management engagement, including with
acquired Business Units, demonstrated through
various activities including the Global Safety
Day, the CEO Safety Award, town halls, internal
communications, site visits, and meetings
with site managers and safety representatives
Board-level HSES Committee provides
oversight and challenge
Corporate major accident prevention policy
and HSES policy that direct company activities,
including contract work, supported by a defined
HSES strategy and management system, and
relevant training and competency management
Active risk assessment process and management
of change for operated assets
Safety-critical maintenance built into work
programmes and budgets
Performance closely monitored by the
Leadership Team, the Board and HSES
Committee. Performance metrics agreed with
the Board and integrated into performance
tracking and incentive compensation
Incident learnings and best practices
shared across the organisation and with
JV partners
Internal independent HSES auditing and
technical assurance in place with a focus
on major accident hazards
Crisis management and emergency
response plans, with regular exercises
to ensure preparedness
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
64
Harbour Energy plc
Annual Report & Accounts 2024
OUR STRATEGIC DRIVERS
SAFE & RESPONSIBLE
Ensure safe, reliable and
responsible operations
SCALE & DIVERSITY
Maintain a high quality portfolio
of reserves and resources
HIGH QUALITY & RESILIENT
Leverage our full cycle capability
to strengthen our portfolio
FINANCIAL DISCIPLINE
Ensure financial strength through
the commodity price cycle
RISK DESCRIPTION
The company may fail to maintain an
organisation structure that aligns with business
needs. The company may also fail to attract,
develop and retain talent or to maintain a
cohesive and engaged culture that aligns with
the company’s values. Consequently, the
organisation may lack the capability, capacity
and culture to effectively execute the strategy
and business plans.
CHANGE IN RISK LEVEL
The unmitigated risk level has increased due to
the demands on the organisation of integrating
the acquired Wintershall Dea assets and
employees. In addition, attracting talent into
the sector remains challenging in some regions.
Organisation and talent:
failure to create and maintain a
cohesive organisation with sufficient capability and capacity
HOW THE RISK IS MANAGED
New corporate organisation implemented
following the Wintershall Dea transaction
that is designed to scale in line with the
company’s strategy
Competitive reward and benefits package
with hybrid working options
Refreshed culture and values programme with
clear linkage to stated purpose and strategy
Staff performance management process
aligned with values and linked to reward
Global learning and development programmes
to support capability development
Succession planning to assess executive
bench strength, identify gaps and ensure
development of high potential employees
Regular staff communications, surveys and forums
to support two-way dialogue and engagement
Arrangements to support positive employee
relations, including a Global Staff Forum, global
employee resource groups, wellness programmes
and an employee recognition programme
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company’s global operations and interests
span diverse geopolitical landscapes, including
regions undergoing significant transitions,
general elections, trade disputes or experiencing
geopolitical tensions. Political instability, security
concerns and evolving regulatory and fiscal
frameworks in the areas where we have assets
pose risks to our business. Any adverse changes
in these factors could negatively affect the
company’s operations and profitability. Moreover,
uncertainty surrounding potential future changes
may deter new investments in these jurisdictions.
Such changes could include unfavourable tax
policies, increased regulatory demands, price
controls, currency fluctuations, production
limitations, cost recovery or dividend restrictions,
trade barriers, contract nullifications and
property expropriation.
Host government political and fiscal risks:
exposure to adverse or uncertain political, regulatory
or fiscal developments in countries where the company operates or maintains interests
CHANGE IN RISK LEVEL
The risk level has increased over the period.
The geopolitical environment remains unstable
and, while the Wintershall Dea transaction
has diversified the company’s risk exposure
in many ways, it has exposed the company
to new macroeconomic and geopolitical risks.
HOW THE RISK IS MANAGED
Active monitoring of operating country
regulatory and legislative agendas
Proactive management of macroeconomic
risks in host countries
Constructive engagement with relevant
government and regulatory stakeholders,
including with those from new countries
Contribution to industry representation on key
issues, including the need for a stable fiscal
environment, the role of oil and gas in the
energy transition, energy security and CCS
The creation of a new government relations
role in the corporate centre to coordinate and
guide government relations activities globally
including the scanning of geopolitical trends,
risks and policies which may impact our
existing and future business
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
65
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
PRINCIPAL RISKS
CONTINUED
RISK DESCRIPTION
The company may fail to maintain safe, reliable
and cost-effective production operations.
Forecasting future production and operating
costs is inherently uncertain, and actual
performance may deviate from expectations.
Significant expenditures and outages may be
required to maintain the operability and integrity
of the asset base as it ages, and replacement
parts may not be readily available due to
obsolescence. Opportunities to add production
or increase throughput may be limited.
Consequently, the company may fail to deliver
expected operational performance.
CHANGE IN RISK LEVEL
While the Wintershall Dea transaction has
expanded the company’s asset portfolio
and resulted in some changes to the nature
and mix of the company’s asset base, the
unmitigated risk level at a portfolio level
remains broadly unchanged.
Operational performance:
failure to deliver expected operational performance
HOW THE RISK IS MANAGED
Clearly stated purpose to ensure safe, reliable
and responsible production of hydrocarbons with
demonstrable track record of meeting guidance
Organisation designed and resourced to
manage current operational activity
Rigorous cost control in place with resources
allocated to maintain asset integrity and reliability
Inventory maintained of near-field drilling and
other opportunities to increase recovery and
help offset natural decline
Operational performance metrics agreed with the
Board and integrated into business performance
monitoring and incentive compensation
Performance reviewed regularly by
management and the Board
Proactive risk-based oversight maintained
across non-operated assets
Creation of a new EVP Technical Services
role on the Leadership Team designed to
increase the capability to provide technical
support to our operational Business
Units, utilise performance benchmarking
to understand relative performance and
identify improvement opportunities,
share best practices across the company,
and monitor emerging technology for
opportunities to enhance performance
Solicitation of third-party volumes to improve
utilisation of existing infrastructure
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company undertakes drilling operations
and other capital projects to explore and
develop oil and gas resources, as well as
to decommission assets at the end of their
economic life. These projects are often
complex and may encounter delays, cost
overruns, unsatisfactory quality or poor
HSES performance. The volume and future
productivity of targeted resources are inherently
uncertain, and outcomes may differ from plans.
Consequently, the company may struggle to
replace reserves in a value-accretive manner,
leading to unexpected declines in future
production and financial performance. In
addition, inaccurate cost estimates for projects
could lead to over-expenditures and, in the
case of decommissioning, inadequate provision
for future liabilities.
CHANGE IN RISK LEVEL
The unmitigated risk level has increased, with
a greater allocation of capital towards organic
growth and an increase in non-operated exposure
following the Wintershall Dea transaction.
Capital programme and delivery:
failure to deliver the capital programme as planned
HOW THE RISK IS MANAGED
Organisation designed and resourced to
deliver the planned capital programme
Processes in place to support the maturation
of resources and drive efficient deployment
of capital including risk-based technical and
economic evaluation processes with defined
stage-gate reviews
Dedicated CCS Business Unit to advance
projects under development and prioritise
expenditures
Innovative processes and technologies to
improve recovery considered where competitive
Technical services assurance team in the
corporate centre to drive independent
governance of capital investment activities
and performance, and to promote transfer
of learnings
Investment metrics agreed with the Board to
ensure consistent evaluation of opportunities
Major project delivery supported by the
technical services function and regularly
reviewed by management and monitored
by the Board
Capital deployment and growth metrics
agreed with the Board and integrated
into business performance monitoring
and incentive compensation
Project performance benchmarked at
appropriate decision gates to understand
relative performance with systematic
lookbacks to inform future performance
improvements
Independent review undertaken of the
company’s reserves and resources
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
66
Harbour Energy plc
Annual Report & Accounts 2024
RISK DESCRIPTION
The company relies on a range of third
parties, including JV partners, downstream
infrastructure owners, trading counterparties,
and suppliers of products and services.
JV partners may not manage assets in alignment
with Harbour’s values and business objectives
and Harbour may have limited ability to
influence or to access detailed information.
The company may be unable to procure certain
assets, products or services on a timely and
cost-effective basis. The company may lose or
be unable to secure access to transportation
for its products or may not be able to realise
full market value from products.
CHANGE IN RISK LEVEL
The unmitigated risk level has increased over
the period. As a result of the Wintershall Dea
transaction, the company has many new
partners and suppliers and increased the
proportion of assets that are operated by others.
Third-party reliance:
failure to adequately manage joint venture partners,
third-party infrastructure owners, supply chain contractors and other partners
HOW THE RISK IS MANAGED
Prioritisation of partnerships with well-established,
experienced, high quality JV partners when
Harbour is in a non-operator position
Well-established relationships with most
partners and suppliers, including regular risk-
based engagement and performance monitoring
Proactive development, oversight, governance
and enforcement of JV rights and commercial
agreements
Formal budgeting and tendering processes
to govern material spend
Contract management processes designed to
identify and monitor supply chain risks, secure
products and services and optimise usage
Strategic partnerships in specific high risk or
value categories to ensure security of supply
and facilitate longer-term value creation
New and existing partners and suppliers
assessed and regularly monitored, supported
by additional security arrangements as required
Transportation for produced oil and gas
supported by industry codes of practice
and contractual agreements
Insurance programmes in place include
contingent business interruption insurance
for loss of revenue following loss or damage
to third-party facilities
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company aims to maintain strong financial
health of the business by working within a
defined financial framework. This financial
framework is designed to ensure a robust
system of financial controls, the efficient
allocation of capital through the commodity
price cycle, and that the financial risks facing
the business, including liquidity, interest rate,
foreign exchange and credit risk, are managed
in line with our appetite or tolerance for risk.
Failure to work within this framework could
hinder our ability to invest adequately in
our existing asset base, fund organic and/or
M&A growth, deliver on our dividend policy
commitment, and/or maintain investment
grade credit ratings.
CHANGE IN RISK LEVEL
The Wintershall Dea transaction has
strengthened the financial health of the
company, as evidenced by the confirmation of
investment grade credit ratings. Consequently,
the principal risk recognised in the 2023
Annual Report as ‘Access to capital’ has been
broadened to encompass broader aspects
of financial health.
Financial discipline:
failure to work within our financial framework to implement the company’s strategy
HOW THE RISK IS MANAGED
Robust financial framework and prudent
capital allocation priorities agreed with
the Board and rigorously implemented
Diversified capital structure in place
and transformed by the Wintershall Dea
transaction, including a debt structure
comprised of unsecured, low cost and
flexible bank facilities and bonds
Decommissioning liabilities and financial
headroom on security postings closely monitored
Disciplined hedging programme in place to
maintain acceptable exposure to commodity
prices and foreign exchange fluctuations
Annual capital budgets and long-range plan
approved by the Board. These consider near-
term commodity prices, cash flow expectations
and credit rating headroom. Plans and spending
levels stress-tested against adverse scenarios
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
67
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
PRINCIPAL RISKS
CONTINUED
RISK DESCRIPTION
The price of oil and gas is influenced by
global and regional supply and demand, and
expectations of future supply and demand. This
makes it difficult to accurately predict future
prices, which may decline for extended periods
or become more volatile. A sustained decline
in prices could undermine our ability to deliver
on our strategy by reducing cash flow available
to protect the balance sheet, fund growth and
maintain shareholder distributions. Excessive
price volatility could hinder business planning
and financial decision-making. The company
actively manages commodity price exposure to
realise sufficient revenue to fund the company’s
strategy through the cycle while protecting the
business from excessive volatility.
Commodity prices:
exposure to the impact of commodity price fluctuations on the business
CHANGE IN RISK LEVEL
The unmitigated risk level remains stable. Commodity
prices remain volatile and uncertain due to several
factors, including ongoing conflicts, economic
uncertainty and political instability. While production
levels and revenues are higher following the
Wintershall Dea transaction, some of the new exposure
is to regional natural gas markets, such as in Argentina
and Egypt, which tend to be fixed and formula prices.
HOW THE RISK IS MANAGED
Board-approved commodity hedging programme
aligned to risk appetite and adjusted for the larger
portfolio. The programme is designed to underpin
the implementation of the financial framework and
includes minimum and maximum hedging limits
Strong control framework in place that covers
the entire hedging lifecycle, including monitoring
and assurance activities to ensure the
hedging programme is applied consistent
with risk appetite
Carbon price hedging conducted to actively
manage the company’s exposure to carbon
pricing in the UK and EU markets and meet
regulatory requirements
Regular hedging position reporting to the Board
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company may fail to maintain adequate cyber
and information security protections, making
it vulnerable to a serious or new form of cyber
security incident or slow to recover from such an
incident. In addition, the emergence of Artificial
Intelligence (AI) technologies may pose new risks
to the business, including the inadvertent leakage
of confidential information. Failure to adequately
manage such risks could result in business or
operational interruption, impact the confidentiality,
integrity, availability and regulatory compliance
of company information, and potentially lead to
heightened safety or environmental risk. These
outcomes could result in regulatory fines, impact
business performance and damage the
company’s reputation.
Cyber and information security:
failure to maintain safe, secure and reliable information systems
CHANGE IN RISK LEVEL
The unmitigated risk level has increased due to the
expanded scale and scope of the company following
the Wintershall Dea transaction and increasingly
sophisticated cyber threats, including emerging use
of AI for phishing and social engineering attacks.
HOW THE RISK IS MANAGED
Experienced and resourced cyber and
information security organisation in place
Provision of threat intelligence services in place
with UK Government and specialist partners
Defensive and preventative controls maintained
to an industry standard that include supply
chain monitoring, phishing testing, AI awareness
and acceptable use, and staff and Board
training to maintain awareness
Disaster recovery and business continuity
plans in place and regularly tested
Resilience independently tested and assured
including through simulation of incidents
Regular review of controls in line with the
evolving threat landscape and regulatory
requirements
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
The company, its employees and contractors
are subject to various laws and regulations
governing corporate and personal conduct
and disclosure, including areas such as fraud,
bribery, corruption, tax evasion, sanctions and
human rights. A major legal and/or regulatory
compliance breach could lead to financial
penalties, erode our values-based culture,
and tarnish our reputation among employees
and external stakeholders. Individual directors
could also face sanctions.
CHANGE IN RISK LEVEL
The unmitigated level of the risk has
increased due to the larger number and variety
of counterparties, as well as the company’s
expanded presence in emerging markets,
following the Wintershall Dea transaction.
Legal and regulatory compliance:
failure to maintain and demonstrate
effective legal and regulatory compliance
HOW THE RISK IS MANAGED
Zero tolerance stance towards fraud, bribery,
corruption and the facilitation of tax evasion
in any form that could be deemed unlawful or
potentially harm the company’s reputation or
financial standing
Global compliance framework in place, including
with new countries, with relevant induction
and training to enhance awareness of the
risks, set clear expectations, prevent material
fraud and promote a ‘speak up’ culture. This
framework includes well-defined and reinforced
values, secure whistleblowing arrangements
and relevant Board-approved policies and
statements covering matters such as code of
conduct, sanctions, ethics, human rights and tax
Corporate governance structure maintained
that complies with the UK Listing Rules, UK
Corporate Governance Code and UK
Companies Act
Emerging laws and regulations closely
monitored to ensure timely compliance
Audit and Risk Committee monitoring of
whistleblowing activity and enforcement
of the code of conduct
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
68
Harbour Energy plc
Annual Report & Accounts 2024
RISK DESCRIPTION
The transition towards a low carbon economy
poses a range of financial, legal, market, regulatory,
technology and reputation risks to the company.
For example, the transition is impacting the supply
and demand for oil and gas and this could lead to
long-term price volatility. The company may face
increased stakeholder scrutiny and expectations
relating to our energy transition and ESG
commitments, the resilience of the strategy and
portfolio, and the extent of disclosures. Access to
capital may be impacted if the company is unable
to meet the evolving expectations of investors,
creditors and lending banks. The company may be
subject to negative NGO or shareholder activism,
impacting our social ‘licence to operate’, including
civil legal action. Long-term physical changes in
weather patterns and ocean currents and more
frequent extreme weather events could potentially
disrupt business activities, increase business
costs and raise insurance premiums. The
delivery of our greenhouse gas strategy may
impact the execution of other aspects of the
strategy or vice versa.
Overall, the long-term viability of the business
may be in question if the company is unable
to maintain a strategy and portfolio that is
demonstrably resilient to evolving market
conditions, requirements and expectations related
to climate change and the energy transition.
Climate change and energy transition:
failure to adapt the strategy in the context of external expectations
CHANGE IN RISK LEVEL
The unmitigated level of this risk remains stable.
Stakeholder expectations continue to evolve,
tempered by continued concerns over energy
supply security.
HOW THE RISK IS MANAGED
Clear commitment made to the safe, reliable
and responsible production of oil and gas
Credible emissions reduction plans in place
to contribute to our 2030 emissions reduction
target, zero routine flaring commitment and
methane intensity target
Emissions reduction targets are included in the
company’s bonus schemes
Greenhouse gas strategy and delivery,
including within the context of the resilience of
the company strategy, monitored by the Board
and HSES Committee
Leading European CCS portfolio, including
material participation in the Viking (UK) project,
the Greensand Future (Denmark) project under
construction, and potential other projects
in Denmark, the UK and Norway, which could
make a significant contribution to the UK and
EU’s emissions reduction goals
Energy transition scenarios and risks,
including the cost of carbon, considered in key
judgements and estimates within the financial
statements, investment decisions, corporate
planning and M&A analysis. Periodic review
of the long-term physical risks undertaken
across core geographies
New and emerging ESG reporting requirements
closely monitored to ensure compliance
Reporting in line with the Task Force on
Climate-related Financial Disclosures (TCFD)
requirements, as mandated by the FCA
Independent verification of greenhouse gas
emissions and energy consumption data
For additional information on the company’s
climate strategy and related risks, see pages 45
to 53 and the Viability statement on page 63.
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
RISK DESCRIPTION
Harbour’s strategy includes growth through
M&A. With respect to the Wintershall Dea
transaction and to future acquisitions, the
company may fail to effectively manage the
pace, scope and cost of integration. Identified
synergies may not be fully realised, and
integration activities could initially lead to
increased cost and complexity, job security
concerns, higher workloads, disengagement
or the loss of key staff. Additionally, the
company may be unable to maintain a scalable
operating model to support the efficient
integration of further acquisitions.
Integration of acquired businesses:
failure to integrate acquired businesses as planned
CHANGE IN RISK LEVEL
The unmitigated risk level has reduced following
the completion of the Wintershall Dea transaction,
with thorough pre-completion access supporting
successful integration planning to date.
HOW THE RISK IS MANAGED
Leadership with a proven track record of
integrating large-scale M&A transactions
and creating value from acquired assets
Harbour’s operating model designed to scale
with business growth and to leverage learnings
from both legacy entities
Integration governance framework in place
for the Wintershall Dea transaction, including
an integration management office, a detailed
integration programme and a transition
services agreement
Integration playbook in place to facilitate
learnings from past integrations
Integration delivery monitored by the
Leadership Team and Board
LINK TO STRATEGIC DRIVERS:
SAFE & RESPONSIBLE
SCALE & DIVERSITY
HIGH QUALITY & RESILIENT
FINANCIAL DISCIPLINE
UNMITIGATED CHANGE SINCE 2023:
To consolidate our reporting requirements under sections 414CA and 414CB of the Companies Act 2006, the table on page 59 sets out our
non-financial and sustainability information statement and shows where in this Annual Report to find each of the disclosure requirements. The Strategic
report, comprising pages 1 to 69, including the non-financial and sustainability information statement, has been prepared in accordance with the
requirements of the Companies Act 2006 and has been approved and signed on behalf of the Board.
Linda Z. Cook
Chief Executive Officer
5 March 2025
69
Harbour Energy plc
Annual Report & Accounts 2024
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
GOVERNANCE AT A GLANCE
The UK Corporate Governance Code 2018
(the Code) is the corporate governance code
which we have reported against during the
financial year to 31 December 2024 and can
be found at frc.org.uk.
Harbour was fully compliant with the provisions of the Code
throughout 2024, except for:
Provision 9, which states that ‘the chair should be
independent on appointment when assessed against the
circumstances set out in Provision 10’. R. Blair Thomas,
the Chair, was appointed pursuant to EIG’s right to appoint
up to two directors to the Board under the relationship
agreement detailed on page 115 and did not meet the
independence criteria of Provision 10 of the Code on
appointment. The EIG relationship agreement expired on
3 September 2024. However, as it was in force at the time
of appointment, we will continue to report non-compliance
for the duration of R. Blair Thomas’ tenure as Chair; and
Provision 20, which states ‘Open advertising and/or
an external search consultancy should generally be
used for the appointment of the chair and non-executive
directors’. In September 2024, Hans-Ulrich Engel
and Dirk Elvermann were appointed to the Board to
represent BASF’s interest as a significant shareholder
of the company. Their appointments were made in
accordance with the BASF relationship agreement
detailed on page 115; in addition, both of the newly
appointed directors bring significant knowledge of the
acquired Wintershall Dea assets, as well as a deep
global business experience. No external recruitment
process was followed. Both Hans-Ulrich Engel and
Dirk Elvermann are classified as non-independent
non-executive directors. For future independent
non-executive director appointments, we intend to
comply with the provision and follow similar recruitment
processes as those detailed in the 2023 Annual Report
& Accounts for Louise Hough and Belgacem Chariag.
Harbour intends to report against the 2024 UK
Corporate Governance Code for the financial year
ended 31 December 2025.
The Board is comprised of a majority of independent
non-executive directors, and the industry experiences and
combined knowledge that R. Blair Thomas, Hans-Ulrich Engel
and Dirk Elvermann bring to the Board is invaluable. The
Board therefore continues to believe that there is sufficient
independent challenge and judgement in the boardroom.
Meeting attendance
Seven Board meetings were held during the year, all of which
were scheduled meetings covering a full agenda of strategic,
performance and governance items.
A full attendance table is available in the Directors’ Report
on page 114.
The Board is collectively responsible for the governance of the
company on behalf of Harbour’s shareholders and is accountable
to them for the long-term sustainable success of the company.
The Board governs the company in accordance with the authority
set out in the company’s articles of association and in compliance
with the Code:
Board of directors
1
Board leadership & company purpose
Page 72
UK CORPORATE GOVERNANCE CODE PRINCIPLES:
A:
The Board promotes the long-term success of the company
B:
The company’s purpose, values and strategy align with its culture
C:
Resources are in place to meet objectives and measure performance
D:
The Board engages effectively with shareholders and stakeholders
E:
Workforce policies and practices are aligned with company values
2
Division of responsibilities
Page 77
UK CORPORATE GOVERNANCE CODE PRINCIPLES:
F:
The Board is led by the Chair who is responsible for its effectiveness
G:
Clear division of responsibilities and balance of independence on the Board
H:
Non-executive directors challenge, guide and hold management to account
I:
The Board has the information, time and resources to function effectively
3
Composition, succession & evaluation
Page 78
UK CORPORATE GOVERNANCE CODE PRINCIPLES:
J:
Appointments are based on merit and objective criteria including diversity
K:
There is a combination of skills, experience and tenure on the Board and committees
L:
Board performance reviews are conducted annually
4
Audit, risk & internal control
Page 82
UK CORPORATE GOVERNANCE CODE PRINCIPLES:
M:
The Board ensures the integrity of reporting and effectiveness of audit functions
N:
Reporting is fair, balanced and understandable
O:
Procedures are in place to manage risk, oversee the internal control framework
and determine principal risks and appetite
5
Remuneration
Page 88
UK CORPORATE GOVERNANCE CODE PRINCIPLES:
P:
Remuneration design supports strategy and aligns to company purpose and values
Q:
There is a formal and transparent procedure for director and senior
management remuneration
R:
Independent judgement and discretion are exercised when authorising
remuneration outcomes
70
Harbour Energy plc
Annual Report & Accounts 2024
The Board has established committees
which assist the Board in discharging its
duties in certain areas.
Each of the committees has formal terms
of reference, copies of which can be found
on the company’s website.
The Board and its committees
are supported by an experienced
Leadership Team, led by our CEO.
Board committees
Leadership Team
The Leadership Team is responsible for
implementation of the Board-approved
strategy, for safe and responsible
delivery of our operational targets and
capital investments, and for building
and leading our talented organisation,
including:
THE LEADERSHIP TEAM
RESPONSIBILITIES
NOMINATION COMMITTEE
PAGE 78
R. BLAIR THOMAS
COMMITTEE CHAIR
Responsibilities
Board composition
Succession planning
and Board appointments
Leads Board performance
review process
Monitors Harbour’s culture
AUDIT AND RISK COMMITTEE
PAGE 82
ALAN FERGUSON
COMMITTEE CHAIR
Responsibilities
Integrity of reporting
Effectiveness of internal
and external audit
Risk management and
internal control framework
HSES COMMITTEE
PAGE 86
MARGARETH ØVRUM
COMMITTEE CHAIR
Responsibilities
Effectiveness of HSES strategy
HSES risk including tolerance
and mitigation
HSES assurance
Integrity of HSES reporting
REMUNERATION COMMITTEE
PAGE 88
ANNE L. STEVENS
COMMITTEE CHAIR
Responsibilities
Remuneration Policy
Remuneration arrangements
for senior management
Oversight of pay and conditions
across Harbour
BOARD OVERSIGHT
MANAGEMENT ACCOUNTABILITY
FIND OUT MORE ONLINE
HARBOURENERGY.COM/ABOUT-US/OUR-SENIOR-TEAM
SAFETY &
SECURITY
BUSINESS
DEVELOPMENT
PRODUCING
OPERATIONS
PEOPLE &
ORGANISATION
PROTECTING THE
ENVIRONMENT
OPERATING
MODEL,
PROCESSES
& SYSTEMS
GROWTH
PROJECTS
CULTURE
CAPITAL
ALLOCATION
RISK
MANAGEMENT
FINANCE,
PLANNING &
REPORTING
INTERNAL
CONTROLS
71
STRATEGIC REPORT
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
GOVERNANCE
CHAIR’S INTRODUCTION
Dear shareholder,
I am delighted to be writing to you on behalf
of the Board in this, Harbour Energy’s 2024
Annual Report.
During 2024, the economic and geopolitical
backdrop remained unpredictable, and there
is continued uncertainty around future
economic growth rates. In spite of this, our
company’s purpose – to play a significant role
in meeting the world’s energy needs through
the safe, efficient and responsible production
of hydrocarbons, while creating value for our
stakeholders – remains relevant, and our
strategic goal to continue building a global,
diverse, independent oil and gas company
remains clear. The past year saw a huge step
towards the delivery of these aims through
the completion of the Wintershall Dea
transaction which has increased our global
footprint by adding material assets in Norway,
Germany, Mexico, Argentina and North Africa.
Your company is now one of the world’s
largest and most diverse independent oil and
gas companies and the Board is proud of the
progress made.
The governance framework at Harbour Energy
is the blueprint for how we work together.
The Board continues to aspire to the highest
standards of corporate governance by steering
our strategy and ensuring its relevance in the
changing market environment. Growth and
international diversification are core to our
strategy, and in assessing potential growth
opportunities, we remain disciplined and
focused on strategic fit and value creation.
This means considering the right things, at the
right time, with the right people and insights.
Our corporate governance structure supports
this objective, and a summary of the
framework can be found on page 70.
Board activities during 2024
Capital allocation, safety, sustainability,
culture, the integration of the Wintershall Dea
assets, and consideration of value creation
and growth opportunities have remained
high on the Board’s agenda throughout
2024. Oil and gas will continue to play a key
role in meeting the world’s energy needs
and it is important that we invest to deliver
reliable supplies in a responsible manner.
Fundamental to our purpose is ensuring safe
operations for our workforce – providing an
environment where our people can undertake
their duties without being put in harm’s way.
Safety has been a fundamental consideration
during the integration of our Wintershall Dea
employees and assets and performance
has been carefully monitored by the Board,
supported by the HSES Committee.
The 2024 total recordable injury rate of
1.0 was higher than 2023. The reasons
for this and mitigating actions taken by us
are described on page 42. While we had
UK Corporate Governance Code Principle
How does the Board apply this Principle?
Further information
A.
A successful company is led by
an effective and entrepreneurial
board, whose role is to promote the
long-term sustainable success of
the company, generating value for
shareholders and contributing to
wider society.
The directors provide leadership
and ensure the company and its
management focus on the delivery
of long-term sustainable success
for all stakeholders, including
shareholders and wider society.
Governance at a glance:
P70
Board activities during
2024:
P72
B.
The board should establish the
company’s purpose, values and
strategy, and satisfy itself that these
and its culture are aligned. All
directors must act with integrity,
lead by example and promote the
desired culture.
The Board has approved the
company’s purpose, values and
strategy and is satisfied they are
aligned with the culture that has
been embedded throughout the
company, regularly meeting with
a wide cross section of staff
to gain the required insight.
Governance at a glance:
P70
Our culture & values:
P18
Harbour culture:
P73
C.
The board should ensure that the
necessary resources are in place for
the company to meet its objectives
and measure performance against
them. The board should also
establish a framework of prudent
and effective controls, which enable
risk to be assessed and managed.
The Board ensures that a robust
financial framework is in place,
underpinned by prudent capital
allocation, to ensure the necessary
resources are in place to meet
Harbour’s objectives and measure
performance within an effective
risk management framework.
Financial review:
P
32
Key performance indicators:
P20
Risk management
framework:
P60
Risk management and
internal control:
P85
D.
In order for the company to meet
its responsibilities to shareholders
and stakeholders, the board should
ensure effective engagement with,
and encourage participation from,
these parties.
The Board seeks to engage actively
with its stakeholders, including
major shareholders, employees,
governments, regulators, partners
and suppliers. Feedback from
stakeholders is considered in the
Board’s decision-making processes.
Engaging with our
stakeholders:
P14
Employee engagement:
P58
Workforce engagement:
P80
E.
The board should ensure that
workforce policies and practices
are consistent with the company’s
values and support its long-term
sustainable success. The workforce
should be able to raise any matters
of concern.
Our workforce policies and practices
are aligned with our values, with
regular employee engagement surveys
resulting in improvement initiatives
throughout the business. Speak Up,
the company’s whistleblowing service,
is available to all employees and
contractors and is regularly publicised
through the company’s communication
channels including town hall meetings.
Audit and Risk Committee
activities during 2024:
P83
Employee practices:
P57
Global ‘pulse’ survey:
P58
1
Board leadership & company purpose
GOVERNANCE AT A GLANCE
PAGE 70
NEXT SECTION OF THE CODE
PAGE 77
THE UK CORPORATE GOVERNANCE CODE IN ACTION
72
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Annual Report & Accounts 2024
a record low for the number of total events
for 2023, regrettably, we had one Tier 1
event, and three Tier 2 events occur in
2024. All events were rigorously investigated
by management, with learnings shared
across the company. To reinforce our
commitment for ever higher standards of
safety and environmental performance, the
bonus scorecard includes a process safety
metric (see page 106 for more detail).
The Board is supportive of the progress being
made on our energy transition journey as we
continue to work towards halving our Scope 1
and 2 emissions for our operated assets by
2030 against our 2018 baseline. In addition,
we made the decision to move forward with
our first operational CCS project – Greensand
Future in Denmark – and, with the addition
of CCS assets from Wintershall Dea, we
now have a leading European portfolio. For
more information on our GHG emissions,
commitments and strategy please see
pages 44 to 53.
The Board approved the $11.2 billion
acquisition of the Wintershall Dea assets
which completed in September 2024.
This transaction was fully aligned with our
corporate strategy for growth, diversification
and strengthening our financial position.
The Board continues to consider a range
of additional growth opportunities – both
organic and inorganic.
During the year, the Harbour values were
refreshed to better reflect the company’s
culture. These values – and their underpinning
behaviours – served as a core part of the
integration programme for Wintershall Dea
employees joining Harbour Energy in
September. Please see page 18 for more
information about our values.
Board performance and composition
I was pleased to welcome Hans-Ulrich Engel
and Dirk Elvermann to the Board in
September, and value the contributions and
insights they bring to Board and committee
discussions. Andy Hopwood has decided not
to stand for re-election at the 2025 AGM.
I would like to thank Andy for his service
as a director since Harbour became a
public company in 2021 and for his
valuable contributions during that time.
The Board has maintained its
oversight of the company’s culture.
During the year we have met with staff
from all levels of the organisation,
including the Leadership Team, Global
Staff Forum representatives, Business
Unit senior leaders, asset managers,
safety representatives and offshore
installation managers.
Leadership Team members regularly attend
and present various topics to the Board
and its committees. Board agendas regularly
include ‘poster sessions’ in which senior
leaders from a Business Unit present an
overview of their business including the
geopolitical and economic environment, the
company’s history in the country, our assets,
safety and operational performance, and our
challenges and opportunities for growth.
These sessions give the Board the opportunity
to meet and engage with senior leaders from
around the world. Following Board meetings,
directors are invited to attend informal
receptions with staff who have presented
during meetings, allowing time for further
discussion and providing the Board with an
opportunity to get to know more staff below
Leadership Team level. In addition, directors
are invited to attend two of the CEO’s quarterly
meetings with the company’s Global Staff
Forum, during which progress against various
employee-focused initiatives is discussed.
Harbour culture
During 2024, the Board extended the Board
and committee independent performance
review programme with Lintstock by a year,
recognising that considerable change has
taken place within the business and noting
the value of being able to measure its
performance year on year on a consistent
basis. The independent review concluded
that the composition and functioning of the
Board and its committees remain effective.
An overview of the Board performance
review process, actions taken, key findings
and next steps is included in the Nomination
Committee report on page 78.
Board priorities for 2025
For the Board and Leadership Team,
our focus during 2025 will be delivering
against our operational and safety targets
and capital programme, completing the
integration of the Wintershall Dea assets,
and continuing to assess further growth
opportunities including organically and
through the pursuit of value-accretive M&A.
The macroeconomic and geopolitical
environment remains challenging and
uncertain, but I am confident that we
have the right team and strategy in place
to create value for all our stakeholders.
Finally, I would like to thank all of our
employees and contractors, shareholders,
partners, suppliers and customers for
their continued support of Harbour Energy.
R. Blair Thomas
Chair
In June, the Board returned to Aberdeen
and made a visit to a key supplier of
aviation services in the UK, Bristow.
The Board met with key Bristow contacts,
toured the facilities and completed a
helicopter simulation experience. Directors
also met with senior leadership in the
Business Unit. Directors were also pleased
to have the opportunity to meet with
several Aberdeen-based employee
networks including the Early Careers
Network, Diversity Network representatives
and elected Safety Representatives.
The Board reviewed the results of the
2024 ‘pulse’ survey to obtain insight into
the progress being made with integration
and culture following completion of the
Wintershall Dea transaction, and will
have access to the results of the next
company-wide engagement survey
in 2025. The Board will, through the
Nomination Committee, continue to monitor
the outcomes of initiatives launched to
address issues raised. Further detail on the
engagement survey outcomes is provided
in the Sustainability review on page 58.
Together, these interactions provide
directors with the opportunity to meet in
person with and hear feedback from a
wide cross-section of our staff and gain
a deeper sense of Harbour’s culture.
The governance framework
at Harbour Energy is
the blueprint for how
we work together.
R. BLAIR THOMAS
CHAIR
73
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GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
BOARD OF DIRECTORS
The Board is collectively responsible for
the governance of the company on behalf
of Harbour Energy’s shareholders and is
accountable to them for the long-term
success of the Group
R. Blair Thomas
Chair
Appointed 31 March 2021
Skills and experience
Blair was appointed as Non-Executive Chair
of the company in March 2021. Blair has
more than 30 years’ experience in the
investment management business, with
a focus on energy and energy-related
infrastructure. Blair’s industry experience
and knowledge of Harbour are invaluable
and his leadership of the Board is of
significant benefit to the company and
shareholders as a whole.
External appointments
with public companies
None
Committee membership
– Nomination (Chair)
Alexander Krane
Chief Financial Officer
Appointed 15 April 2021
Skills and experience
Having spent a large portion of his career
as CFO of Aker BP, including during the
merger of Det Norske Oljeselskap and BP
Norge, Alexander has experience leading a
large finance function through integration
processes. He brings extensive listed
company experience and understanding
of debt and equity capital markets, which
enhances the Board’s ability to maintain
balance sheet strength and deliver on its
growth and investment plans through the
commodity price cycle.
External appointments
with public companies
None
Committee membership
N/A
Linda Z. Cook
Chief Executive Officer
Appointed 31 March 2021
Skills and experience
Linda has significant experience in building
and managing large-scale, global energy
businesses at both Royal Dutch Shell
where she worked for almost 30 years and
subsequently in private equity at EIG and
Harbour Energy. She has a track record of
successful strategic execution and growth,
including through M&A, major project
delivery and raising capital. Linda’s
experience in international oil and gas,
and in disciplined capital allocation within
the sector is of great value to Harbour as the
company works to implement its strategy.
External appointments
with public companies
– BNY Mellon: Non-Executive Director
and Chair of the Audit Committee
Committee membership
N/A
74
Harbour Energy plc
Annual Report & Accounts 2024
Simon Henry
Senior Independent Non-Executive Director
Appointed 31 March 2021
Skills and experience
Simon’s position as Senior Independent
Director ensures that the highest standards
of corporate governance are maintained.
He plays a pivotal role in managing the
relationship with the company’s major
shareholders, and ensuring the company
is able to operate independently and in
accordance with its obligations as a listed
company. In addition, Simon brings
significant experience in both the oil and
gas sector, including a focus on health,
safety and sustainability, and public
markets having spent his entire career
working with large-scale companies,
including as CFO for Royal Dutch Shell plc.
External appointments
with public companies
– Rio Tinto plc: Non-Executive Director and
Chair of the Audit and Risk Committee
Committee membership
– Audit and Risk
– HSES
Belgacem Chariag
Independent Non-Executive Director
Appointed 1 May 2023
Skills and experience
Belgacem has extensive experience in the
energy, materials and chemicals industries,
having held a variety of leadership positions
within oil field services companies, including
Baker Hughes and Schlumberger. Most
recently Belgacem was Chairman and CEO
of Ecovyst Inc, a leading global provider of
speciality catalysts, materials, chemicals
and services. Belgacem brings extensive
global industry expertise to Harbour,
including in the area of health and safety,
which enhances the Board’s ability to support
and oversee the delivery of the strategy.
External appointments
with public companies
– Helmerich & Payne, Inc: Non-Executive
Director and Chair of the Remuneration
Committee
Committee membership
– HSES
– Nomination
Dirk Elvermann
Non-Executive Director
Appointed 3 September 2024
Skills and experience
Dirk was appointed as a non-executive
director of the company pursuant to
the relationship agreement with BASF
(described on page 115). Dirk holds a
doctorate in law and has gained broad
international business expertise in various
roles at BASF since 2003. As the CFO and
Chief Digital Officer of BASF, Dirk brings a
wealth of experience and understanding
of finance and digitalisation.
His deep expertise provides valuable insights
to the Board, helping to drive operational
efficiency and support the company’s
continued growth and innovation.
External appointments
with public companies
– BASF SE: CFO
and Chief Digital Officer
Committee membership
– Nomination
NEW MEMBER
Hans-Ulrich Engel
Non-Executive Director
Appointed 3 September 2024
Skills and experience
Hans-Ulrich was appointed as a
non-executive director of the company
pursuant to the relationship agreement
with BASF (described on page 115).
Hans-Ulrich holds a doctorate in law
and has decades of experience in the
chemicals and energy sectors including
as former CFO and Vice Chairman of the
Board of BASF SE. His expertise includes
M&A, major restructuring projects and
business development skills, which
provides the Board with valuable insights
to drive strategic growth and the success
of the company.
External appointments
with public companies
– DHL Group (Supervisory Board member
and Chair of Audit Committee)
Committee membership
– HSES
NEW MEMBER
75
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Board representative to the Global Staff Forum
Board representative to the Global Staff Forum
BOARD OF DIRECTORS
CONTINUED
Margareth Øvrum
Independent Non-Executive Director
Appointed 1 April 2021
Skills and experience
Margareth has extensive experience
of international oil and gas operations,
having worked for almost 40 years at
Equinor and its predecessor companies.
At Equinor, Margareth spent almost 17
years on the executive committee with
global responsibility for HSES, project
development, drilling, procurement,
technology and new energy. Margareth’s
extensive leadership experience of major
projects, health and safety, sustainability
and the role of digital technology in
engineering are invaluable to the Board.
As Chair of the HSES Committee,
Margareth has a passion for safety and the
environment which is essential to her role.
External appointments
with public companies
– FMC Corporation: Non-Executive Director
– Technip FMC plc: Non-Executive Director
– Transocean Ltd: Non-Executive Director
Committee membership
– HSES (Chair)
– Audit and Risk
Andy Hopwood
Independent Non-Executive Director
Appointed 31 March 2021
Skills and experience
Andy has over 40 years’ experience in the
global oil and gas industry gained during
his long career with bp. He brings a strong
understanding of the technical, operational
and commercial issues associated with
developing and managing large-scale,
complex energy assets around the world,
from exploration through to decommissioning,
including in the areas of safety and the
environment. Andy’s technical, operational
and leadership expertise in the oil and gas
sector are invaluable to the Board and
its committees in overseeing the existing
portfolio and assessing opportunities
for investment.
External appointments
with public companies
None
Committee membership
– Nomination
– Remuneration
Alan Ferguson
Independent Non-Executive Director
Appointed 31 March 2021
Skills and experience
Alan is a chartered accountant and brings
current and relevant financial experience to
the Board and Audit and Risk Committee
following his executive career in finance roles
including being CFO of three FTSE 100/250
companies. Alan has over a decade of
experience leading audit committees of listed
companies including the Weir Group, Croda
International and Johnson Matthey plc. The
Audit and Risk Committee also benefits from
Alan’s insight from his position as a Board
member of the Audit Committee Chairs’
Independent Forum, and his expertise in
corporate governance, audit and accounting is
of great value to the Board and the company.
External appointments
with public companies
– AngloGold Ashanti plc: Non-Executive
Director and Chair of the Audit and
Risk Committee
Committee membership
– Audit and Risk (Chair)
– Remuneration
Louise Hough
Independent Non-Executive Director
Appointed 1 May 2023
Skills and experience
Louise has a wealth of experience and deep
understanding of both financial and energy
markets. Following 25 years at UBS, Louise
played a lead role in preparing Saudi Aramco
for its first public bond issuance and IPO
as Head of International Investor Relations.
At Saudi Aramco Louise was also a member
of the Sustainability Steering Committee,
working extensively on all aspects of ESG
reporting. Louise’s experience advising
investors, boards and executive
management teams on capital markets-
related activity, sustainability and
governance issues is of great value
to the Board and its committees.
External appointments
with public companies
None
Committee membership
– Audit and Risk
– Remuneration
76
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Annual Report & Accounts 2024
1
2
3
4
5
Anne L. Stevens
Independent Non-Executive Director
Appointed 31 March 2021
Skills and experience
Anne brings a wealth of experience built
up over a long career in engineering and
executive roles in large global companies. In
recent years, she has served on remuneration
committees, including as Chair, in a number
of large organisations, including Anglo
American plc, expertise that she brings to her
role as Remuneration Committee Chair. Anne
also has significant experience engaging with
investors to deliver remuneration outcomes
that are of benefit to all stakeholders.
External appointments
with public companies
– Aston Martin Lagonda Global Holdings
plc: Non-Executive Director, and Chair
of the Remuneration Committee and
the Sustainability Committee
Committee membership
– Remuneration (Chair)
– Nomination
Supporting the Board on all governance matters
Rachel Rickard
Company Secretary
Rachel is a Fellow of the Chartered
Governance Institute with more than
20 years’ experience gained across a
variety of industries and sectors in FTSE
100 and FTSE 250 listed companies.
Rachel ensures that the Board has the
policies, processes, information, time and
resources it needs to function effectively
and efficiently.
THE UK CORPORATE GOVERNANCE CODE IN ACTION
UK Corporate Governance Code Principle
How does the Board apply this Principle?
Further information
F.
The chair leads the board and is responsible for its overall
effectiveness in directing the company. They should demonstrate
objective judgement throughout their tenure and promote a
culture of openness and debate. In addition, the chair facilitates
constructive board relations and the effective contribution of
all non-executive directors, and ensures that directors receive
accurate, timely and clear information.
The Chair leads the Board and ensures its effectiveness.
He brings significant industry experience, demonstrating
objective judgement despite not being independent on
appointment. The Chair promotes an active culture of openness
and debate, facilitating constructive Board relations and the
effective contribution of all non-executive directors, ensuring
that directors receive accurate, timely and clear information.
Chair’s introduction:
P72
UK Corporate Governance Code
explanation:
P70
Board and committee
performance review:
P80
G.
The board should include an appropriate combination of
executive and non-executive (and, in particular, independent
non-executive) directors, such that no one individual or small
group of individuals dominates the board’s decision-making.
There should be a clear division of responsibilities between
the leadership of the board and the executive leadership of
the company’s business.
The Board is comprised of a majority of independent directors,
with a clear division of responsibilities between the leadership
of the Board and the executive leadership and management
of the business. Given the Chair’s position as an EIG executive,
and Hans-Ulrich Engel and Dirk Elvermann’s roles as
shareholder representative directors, relationship agreements
have been and continue to be in place to ensure the company
is able to operate independently and to the highest standards
of corporate governance.
Relationship agreements:
P115
Governance at a glance:
P70
H.
Non-executive directors should have sufficient time to meet
their board responsibilities. They should provide constructive
challenge, strategic guidance, offer specialist advice and hold
management to account.
Non-executive directors ensure they have sufficient time to
meet their responsibilities, including providing constructive
challenge, helping to develop the company’s strategy and holding
management to account for the company’s performance. No
director holds external directorships at more than three other
public companies.
Meeting attendance:
P114
Board of directors:
P74
I.
The board, supported by the company secretary, should
ensure that it has the policies, processes, information, time and
resources it needs in order to function effectively and efficiently.
All directors have access to the Company Secretary who
is responsible for advising the Board and its committees
on all governance matters.
2023-2024 performance
review:
P80
Governance at a glance:
P70
GOVERNANCE AT A GLANCE
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2
Division of responsibilities
77
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Workforce engagement
and culture
30
Succession planning
20
Talent management
and development
20
NED recruitment
10
Board performance review
10
Corporate governance
and compliance
10
NOMINATION COMMITTEE REPORT
UK Corporate Governance Code Principle
How does the Board apply this Principle?
Further information
J.
Appointments to the board should be subject
to a formal, rigorous and transparent procedure,
and an effective succession plan should be
maintained for board and senior management.
Both appointments and succession plans should
be based on merit and objective criteria and,
within this context, should promote diversity of
gender, social and ethnic backgrounds, cognitive
and personal strengths.
The Nomination Committee is responsible for ensuring that plans are in place
for orderly succession to the Board and senior management positions.
Appointments are subject to a formal, rigorous and transparent procedure, supported
by the use of external search agencies where appropriate, to ensure review of a
diverse range of candidates, including consideration of gender, ethnicity, social and
cultural backgrounds alongside career experience, technical and professional skills.
Board and committee succession plans are based on a wide range of criteria
taking into account the need to maintain a diverse Board as well as considering
short, medium and long-term composition requirements alongside the expected
needs of the business.
Succession planning:
P79
Appointment of shareholder
representative non-executive
directors:
P79
K.
The board and its committees should
have a combination of skills, experience and
knowledge. Consideration should be given to
the length of service of the board as a whole
and membership regularly refreshed.
The Board and its committees have a balance of skills, experience, knowledge
and diversity. Committee memberships comprise non-executive directors only.
The Nomination Committee reviews the skills matrix and tenure of each director
on an annual basis to ensure that the Board’s plans for succession are aligned
with the needs of the business.
Skills matrix:
P79
Non-executive director
succession planning:
P79
Board of directors:
P74
L.
Annual evaluation of the board should
consider its composition, diversity and how
effectively members work together to achieve
objectives. Individual evaluation should
demonstrate whether each director continues
to contribute effectively.
The Board and its committees undertake annual performance reviews, supported
by an external provider, with the Nomination Committee overseeing this process.
In 2023, having concluded a three-year review programme supported by Lintstock,
the relationship was extended for a further year. The 2024 review was based on
individual questionnaires, the results of which were compiled into reports used
as a basis for discussion and evaluation of the Board, committee and individual
performance of each director. The Board and Committee viewed it as appropriate
to use the incumbent provider so as to enable a direct comparison to take place.
Externally facilitated Board
and committee performance
review process:
P80
3
Composition, succession & evaluation
GOVERNANCE AT A GLANCE
PAGE 70
NEXT SECTION OF THE CODE
PAGE 82
Role of the Committee
To plan director succession
and oversee plans for senior
management succession and talent
development, taking into account
the strategy of the company and
the skills, knowledge, diversity
and experience required to deliver
the strategy; and to oversee the
development of a diverse pipeline
for succession to Board and senior
management positions
To keep under review the structure,
size and composition of the Board
and its committees
To lead the process for the annual
Board and committee performance
review and oversee the results
and actions
To lead the process for Board
appointments, ensuring it is
formal, rigorous and transparent,
and identifying and nominating
candidates for the Board’s approval
To lead Board-level engagement
with Harbour’s workforce, ensuring
effective engagement and enabling
them to raise matters of concern
To assess and monitor Harbour’s
culture, to ensure that it is aligned
with the company’s purpose, values
and strategy
THE UK CORPORATE GOVERNANCE CODE IN ACTION
1
2
3
4
5
How the Committee spent its time during the year (%)
During 2024, the Committee focused
its attention on optimising Board and
committee composition.
R. BLAIR THOMAS
COMMITTEE CHAIR
Director
Meetings attended
Percentage
R. Blair Thomas (Committee Chair)
100%
Belgacem Chariag
1
80%
Andy Hopwood
100%
Anne L. Stevens
100%
Dirk Elvermann
2
100%
Attended
Not attended
1
Belgacem Chariag was unable to attend one meeting due to extenuating
circumstances. He received meeting materials and had the opportunity
to provide input to the Committee.
2
Dirk Elvermann joined the Board and the Nomination Committee on
3 September and attended all meetings that he was eligible to attend.
78
Harbour Energy plc
Annual Report & Accounts 2024
Dear shareholder,
During 2024, the Committee focused
its attention on optimising Board and
committee composition; ensuring
sufficient organisational capacity to
successfully integrate and operate
the enlarged company following
completion of the Wintershall Dea
transaction; and workforce
engagement and culture.
The Committee held five meetings during
the year. We were pleased to welcome Dirk
Elvermann to the Committee in September
following his appointment to the Board.
Leadership, organisation and
succession planning
The Committee’s remit includes responsibility
for reviewing the needs of Harbour’s
leadership, both at the executive and
non-executive levels, to ensure the company
can continue to compete effectively in the
marketplace, including contingency planning
for any sudden or unforeseen circumstances.
During 2024, the Committee spent time
ensuring that the Leadership Team and
organisational structure – in particular at
the corporate centre – had sufficient capacity
and capability to lead the enlarged company
effectively following completion of the
Wintershall Dea transaction. It was concluded
that the addition of three new roles to the
Leadership Team was appropriate: a Chief
Operating Officer (COO) whose responsibility
would be the safe delivery of operational
targets and capital investments across the
Business Units; an EVP Technical Services
whose responsibilities would include corporate
support and assurance for operations and
technical matters across the business; and
an EVP CCS to be accountable for Harbour’s
expanded portfolio of CCS projects. In
addition, new roles were created in other
corporate functions, for example in Finance
and HR, to support the larger business.
As vacancies in the new organisation were filled,
the Committee ensured diversity remained
a key factor in the selection process, from
the standpoint of gender and also reflecting
the importance of attracting talent from the
Wintershall Dea corporate centre to help enable
an effective post-acquisition integration.
The Committee also continued to monitor
talent development across the company,
including for the Leadership Team roles, the
positions reporting to the Leadership Team,
Business Unit Managing Director positions
and other safety and business critical roles.
During 2024, monitoring included progress
reports covering the Future Senior Leaders
Programme introduced in 2023.
The programme is designed to support a
diverse range of potential successors to the
Leadership Team, and includes psychometric
assessment, business simulation activity,
personal coaching, and small group workshops
to address development needs and identify
trends. Role success profiles were developed
for all safety and business critical roles. Talent
pools are being developed for these critical
roles to ensure a robust talent pipeline to
support strategic resource planning.
The Harbour Management Programme was
introduced in 2023. We also provide learning
opportunities for all employees via a Smart
Skills series and self-service learning software.
Appointment of shareholder
representative non-executive directors
and Board succession planning
Two shareholder representative non-executive
directors, Hans-Ulrich Engel and Dirk
Elvermann, were appointed to the Board on
3 September 2024, and will be standing for
election by shareholders at the 2025 AGM.
The appointments were made in accordance
with the relationship agreement with BASF,
which became Harbour’s largest shareholder
on completion of the Wintershall Dea
transaction. The process undertaken by the
Committee in appointing the shareholder
representative directors followed the process
set out in the relationship agreement, with
BASF nominating Dirk and Hans-Ulrich for
appointment. For any future independent
non-executive director appointments, the
Committee will continue to use an external
consultant, as used in 2023.
The Committee agreed that Dirk and
Hans-Ulrich possess the necessary skills
and experience to complement the balance of
the existing knowledge and capabilities of the
Board and its committees and further support
execution of the company’s strategy, and
recommended the appointment of Dirk and
Hans-Ulrich to the Board for approval. The
Committee discussed the Board committees’
composition in line with Dirk and Hans-Ulrich’s
skillsets and confirmed their respective
appointments to the Nomination Committee
and HSES Committee. The Committee
noted the importance of maintaining the
independence of membership in the Audit
and Risk Committee and the Remuneration
Committee in accordance with the Code.
Andy Hopwood has decided not to stand for
re-election at the 2025 AGM. I would like to
thank Andy for his service as a director since
Harbour became a public company in 2021 and
for his valuable contributions during that time.
The Committee believes that the structure and
composition of the Board and its committees
is suitable for the company at present.
The Committee will continue to monitor the
composition of the Board alongside the tenure of
directors to ensure the Board retains a suitable
balance of skills, experience and diversity.
Director induction and training
On joining the Board, each director completes
a bespoke induction programme designed
by the Company Secretary, approved by
the CEO and overseen by the Committee.
As part of Hans-Ulrich and Dirk’s induction
programmes they met with the CEO, CFO,
Company Secretary and General Counsel
and several members of management at the
Board and committee meetings held shortly
after their appointment. Given their existing
knowledge of the Wintershall Dea assets
and business, the induction focused primarily
on legacy Harbour and ongoing strategy,
financing, legal and regulatory compliance
and risk. Individual sessions were also
arranged with the Chairs of the respective
committees that Hans-Ulrich and Dirk joined,
as well as with the Chair of the Board.
A schedule of ‘poster’ sessions continues
to run, to provide all Board members with a
deeper understanding of specific Business
Units or topics. For example, at the October
and December Board meetings, poster
sessions were held focused on the Norway,
Germany, Argentina and CCS Business Units,
including access to the relevant senior
management teams.
Board skills and experience
Non-executive
director
Oil & gas
Financial
International
Listed
Mergers &
acquisitions
Sustainability
& safety
Operational
excellence
R. Blair Thomas
Simon Henry
Belgacem Chariag
Dirk Elvermann
Hans-Ulrich Engel
Alan Ferguson
Andy Hopwood
Louise Hough
Margareth Øvrum
Anne L. Stevens
79
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
NOMINATION COMMITTEE REPORT
CONTINUED
Shortly after Dirk and Hans-Ulrich joined the
Board, in conjunction with the October Board
meeting, an informal reception was held in
the evening for Board members to meet with
all London-based staff. Further opportunities
will be provided throughout 2025 – in London
and other locations – during which directors
will have the opportunity to meet with a
cross-section of our workforce and gain a
greater understanding of our operations
and a deeper sense of Harbour’s culture.
Throughout the year, directors are provided
with access to a varied programme of training
opportunities, as well as in-depth sessions
on material topics relevant to the business.
The directors are also required to complete
various training programmes undertaken
by all employees, including ethics and
compliance, share dealing and management
of inside information, and cyber security.
Externally facilitated Board and
committee performance review process
The Board monitors and improves its
performance by reflecting on the continuing
effectiveness of its activities, the quality
of its decisions and by considering the
contributions made by Board members.
The Committee completed its final year of
a three-year Board performance evaluation
plan facilitated by Lintstock in 2023. To help
draw a direct comparison post-acquisition,
Lintstock was engaged for an additional year
and conducted the review for 2024. There is
no connection between Lintstock and either
Harbour Energy plc or the directors.
This year’s review was conducted through the
completion of online surveys used to evaluate
the performance of the Board, its committees
and individuals throughout the year.
The 2024 surveys were consistent with those
used in previous years to enable comparison
of the results, with the addition of specific
questions to consider work completed during
the year. Reports were prepared by Lintstock
and used by the Board, its committees and
individual directors to discuss findings and
agree areas to focus on in the year ahead in
terms of Board and committee performance.
The Chair held one-to-one meetings with
directors regarding their individual
performance reviews. The Senior Independent
Director also led a private session to discuss
the Chair’s performance.
Overall, the results of the 2024 review were
positive, with improvements shown where
actions had been taken in response to the
outcome of the previous year’s review. Areas
which scored well relative to an external
benchmark included: skills and experience
of the Board, Board dynamics, as well as
the collaboration and challenge of the wider
Leadership Team; oversight of execution of
strategy; meeting management, governance
flows and support; oversight of safety;
engagement with stakeholders; the structure
at senior levels and visibility of potential
successors as well as succession at the layer
below the Board; risk appetite and mitigation;
and talent development processes.
Areas identified for continued focus in
2025 include:
succession planning;
ongoing work on stakeholder
engagement; and
keeping the Board updated on relevant
external developments.
The Committee will continue to monitor
progress of the areas identified.
The Committee considered the findings of the
evaluation and concluded that each director
continues to contribute effectively and
has sufficient time to devote to their role.
The outcome of the annual independence
assessment for the non-executive directors
concluded that each independent director
continues to be independent. The Committee
and the Board are therefore unanimous
in recommending the appointment and
re-appointment of all directors who will
be standing for election and re-election
at the 2025 AGM.
Workforce engagement
The Board has a variety of means to engage
directly with employees throughout the year,
including a combination of the Provision 5
mechanisms set out in the UK Corporate
Governance Code, namely a workforce advisory
panel and designated non-executive directors.
Staff forums, both local and global, are
made up of volunteers from the workforce
and have a mandate to enable the two-way
flow of information, feedback and ideas
between the workforce and management.
Local staff forums meet regularly each year
and report into the Global Staff Forum, which
meets with the CEO and members of the
Leadership Team four times a year. Two
designated non-executive directors, Andy
Hopwood and Louise Hough, act as Board
representatives to the Global Staff Forum
and are invited to join two of these meetings
annually, with an open invitation to all
non-executive directors to attend. The
Committee receives regular updates on
the actions arising from the Global Staff
Forum feedback. During 2024, the Global
Staff Forum addressed matters raised
in the 2023 global engagement survey
covering career development and learning,
communications and simplification;
in addition, a session was held covering
our compensation structure which included
a review of executive compensation.
2023-24 performance review
Key findings from the previous year and actions taken
to address the findings are shown in the table below:
Finding
Action taken
Board ratings 2024 vs 2023
Increase
engagement
with more
stakeholder
groups
Board members have met with various stakeholders
over the year and updates on engagements have been
communicated at Board and committee meetings and as
part of the CEO updates to the Board. Please see examples
in our Section 172(1) statement on page 15.
Engagement with
shareholders
Engagement with
partners and suppliers
Improve
balance
of Board
discussions
on growth
Board agendas included focus on strategic growth
opportunities at every meeting. Poster sessions provide a
helpful format for deep dives into select topics. Agendas are
balanced in time allocation between performance, strategy,
special topics and governance. The Board had full oversight
of the Wintershall Dea asset acquisition and communication
flows between the CEO and Board throughout the various
stages of the transaction were rated highly.
Balance of Board
discussions on
organic and inorganic
growth, with strong
agenda management
and poster sessions
well received
Succession
and talent
development
Dedicated organisation design, succession and talent
review sessions held with the Nomination Committee.
The focus was on expanding the Leadership Team and
recruiting additional senior talent into the company to
increase the leadership capacity following completion of
the Wintershall Dea transaction. An overview of talent and
leadership development programmes at all levels of the
organisation was also well received.
Visibility of internal
successors
Talent development
processes
Strengthen
investment
case
The Wintershall Dea asset acquisition successfully
executed, reflecting delivery of strategy, and resulting
in an increase in market capitalisation and enabling
Harbour to achieve investment grade ratings.
Oversight of execution
Strength of
investment case
Improved
Stable
80
Harbour Energy plc
Annual Report & Accounts 2024
Harbour also has a comprehensive group of
employee networks to ensure engagement
across the company. At a local level, supported
by the DE&I team, there are voluntary
employee-led networks, including ability,
early careers, cultural, gender balance,
neurodiversity, Pride, menopause support
and STEM (science, technology, engineering
and maths) ambassadors. The aim of these
networks is to improve engagement and to
foster a diverse, inclusive workplace, offering a
safe space for employees to raise awareness
of relevant issues, often linked to identity.
Feedback from the employee networks is
taken to the Global Diversity Council which
includes the various network chairs and
works with management to implement
improvement initiatives. Each of the
networks is sponsored by a member of
the Leadership Team. The Board receives
updates from the Global Diversity Council
through annual DE&I updates to the
Nomination Committee. Board members
also met with the Early Careers Network and
joined a Diversity Council Meeting during
their visit to Aberdeen in June 2024. Further
information on employee engagement
initiatives is available in the Sustainability
review on page 58.
The Committee was pleased to see the strong
company-wide participation in the global
engagement interim pulse survey, which had
a global employee response rate of 74 per
cent. This was focused on ‘change’ and was
rolled out in autumn 2024, post completion
of the Wintershall Dea transaction.
The Committee reviewed the results of the
survey and management are meeting with
their teams, staff forums and employee
networks to review the data and develop
both local and global initiatives to address
key findings.
A full global engagement survey is expected to
be rolled out in 2025, within one year of the
completion of the Wintershall Dea transaction.
The Committee considers that the existing
workforce engagement mechanisms remain
suitable for the organisation at this time
due to the wide range of insights received
from employees representing all levels of
the organisation.
R. Blair Thomas
Committee Chair
Diversity, equity and inclusion
All Board appointments are made based on merit,
experience and performance, while also actively
seeking diversity of skills, gender, social and ethnic
backgrounds, cognitive and personal strengths.
The Committee’s oversight role includes ensuring
that diversity, equity and inclusion are integrated
into our business management system, HR
standards and recruitment processes, and remain
front of mind as we continue to build Harbour’s
corporate culture and work to execute the strategy.
The policy with respect to Board diversity is
reviewed annually by the Committee and aims
to ensure the optimal composition of the Board
and its committees for successfully delivering
Harbour’s strategy, with a goal to meet the targets
contained in the FCA UK Listing Rules on diversity:
that at least 40 per cent of directors are women;
that at least one of the roles of Chair, CEO,
Senior Independent Director or CFO is held
by a woman; and
that at least one Board director is from a
minority ethnic background.
Following the appointment of two shareholder
representative directors on 3 September 2024,
through to 31 December, we no longer met the
target that 40 per cent of the directors are
women. Our Board currently stands at 33 per
cent female. As BASF has the right to appoint
two directors to the Board under the terms of the
relationship agreement, we have updated our
Board diversity policy to have a target that 40 per
cent of Board members not subject to significant
shareholder appointment are to be women,
provided this is consistent with the prevailing
skills and diversity requirements of the company
as and when seeking to appoint a new director.
As at the date of this report, there are four women
out of 10 relevant Board members (being
the Chair, two executive directors and seven
independent non-executive directors but
excluding the two shareholder representative
directors), thereby comprising 40 per cent.
43 per cent of our independent non-executive
directors are female. Future appointments will
consider gender as part of the recruitment process
but appointments will continue to be based on
merit, all areas of diversity and alignment of skills
to the Group’s strategy. Our CEO is female, and
one of our Board members has an ethnic minority
background. In relation to the diversity of the
Board’s committees, we recognise it is not always
practical to set meaningful diversity targets for the
committees due to their smaller memberships.
However, diversity is considered when reviewing
committee membership. The Committee aims
to bring diverse perspectives to all areas of work
conducted by the Board and its committees.
Committee membership following the appointment
of new directors shows the success of this
approach, with diverse perspectives represented
on each of the Board committees. Gender parity
has been achieved in both the Audit and Risk
Committee and Remuneration Committee.
Among senior management, women and ethnic
minorities represented 38 per cent and 11 per
cent respectively of the Leadership Team and
its direct reports, excluding executive directors,
as at 31 December 2024. As Harbour moves
forward into 2025, our drive to continuously
improve diversity, equity and inclusion will help
to ensure that we have the right people in place
to deliver strong performance and growth in line
with the company’s ongoing strategy.
The company’s gender and ethnic diversity
data is collected through the HR management
system, where employees are invited to
voluntarily answer questions related to ethnicity,
national identity and religious affiliation.
Further details of the Board’s composition are
outlined on pages 74 to 77 and the disclosure
required under the UK Listing Rule 6.6.6R(10),
as at the reference date of 31 December 2024,
is set out below:
Gender
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
1
Number in
executive
management
2
Percentage
of executive
management
Men
8
66.67%
3
6
60%
Women
4
33.33%
1
4
40%
Not specified/prefer not to say
Ethnicity
Number of
Board members
Percentage of
the Board
Number of
senior positions
on the Board
1
Number in
executive
management
2
Percentage
of executive
management
White British or other white
(including minority white groups)
11
91.67%
4
10
100%
Mixed/multiple ethnic groups
1
8.33%
Asian/Asian British
Black/African/Caribbean/
Black British
Other ethnic group, including
Arab
Not specified/prefer not to say
1
Definition of senior Board position: Chair, CEO, CFO, Senior Independent Non-Executive Director.
2
Definition of executive management: the executive committee or more senior executive or managerial
body below the Board, including the Company Secretary but excluding administrative and support staff.
81
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Financial reporting
and external audit
40
Risk management, internal
control and internal audit
30
Governance and committee
performance review
15
Special topics
15
Director
Meetings attended
Percentage
Alan Ferguson (Committee Chair)
100%
Simon Henry
100%
Louise Hough
100%
Margareth Øvrum
100%
Attended
Not attended
UK Corporate Governance Code Principle
How does the Board apply this Principle?
Further information
M.
The board should establish formal and
transparent policies and procedures to
ensure the independence and effectiveness
of internal and external audit functions and
satisfy itself on the integrity of financial and
narrative statements.
The Board, supported by the Audit and Risk Committee, has established
formal and transparent policies and procedures which ensure that internal
audit and the external auditors are independent and effective. These
procedures are important in assisting the Committee when satisfying itself
as to the integrity of financial and narrative statements in external reporting.
Role of the Committee:
P82
Independence, objectivity and
tenure of external auditors:
P84
Quality of the external
audit process:
P84
Internal audit:
P85
N.
The board should present a fair,
balanced and understandable assessment
of the company’s position and prospects.
The Board, supported by the Audit and Risk Committee, considers the 2024
Annual Report and financial statements to present a fair, balanced and
understandable assessment of the company’s position and prospects,
confirming that it provides the information necessary for shareholders to
assess the company’s position, performance, business model and strategy.
During the year, the Board has also considered the same in relation to
public reporting including trading and operations updates and the half-year
results and financial statements.
Key activities during the year:
P83
Financial reporting judgements
and estimates:
P83
Statement of directors’
responsibilities:
P117
O.
The board should establish procedures
to manage risk, oversee the internal control
framework, and determine the nature and
extent of the principal risks the company
is willing to take in order to achieve its
long-term strategic objectives.
The Audit and Risk Committee supports the Board in establishing
procedures to manage risk, oversee the internal control framework
(including preparation to meet the expanded future UK Corporate
Governance Code requirements related to material control effectiveness)
and determine the nature and extent of the principal risks the company
is willing to take in order to achieve its strategic objectives.
Risk management:
P60
Monitoring and effectiveness of the
risk management framework:
P62
Risk management and internal
control:
P85
4
Audit, risk & internal control
GOVERNANCE AT A GLANCE
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PAGE 88
Role of the Committee
Monitors the integrity of the
company’s financial statements, and
any formal announcements relating to
the company’s financial performance,
and the significant financial reporting
judgements they contain
Reviews the external auditor’s
independence, objectivity and the
effectiveness and quality of the
audit process
Monitors and reviews the
effectiveness of the company’s risk
management and internal control
systems including the identification
of emerging risks together with
the results of the programme of
reviews of these systems and
management’s response to the
review findings
Monitors and reviews the
effectiveness of the process
for ensuring actions are taken
to mitigate the risks which are
considered by the Board to be the
principal risks facing the company
Monitors and reviews the
effectiveness and objectivity of the
company’s internal audit function,
the appropriateness of its work plan,
the results of reviews undertaken,
and the adequacy of management’s
response to matters raised
Develops and implements policy on
the engagement and tenure of the
external auditors and on the supply
of non-audit services
Monitors the enforcement of the
company’s Code of Conduct and
the adequacy and appropriateness
of its whistleblowing procedure
THE UK CORPORATE GOVERNANCE CODE IN ACTION
1
2
3
4
5
How the Committee spent its time during the year (%)
Our focus in 2024 was on ensuring
our control systems remained
effective through the completion
of the Wintershall Dea transaction.
ALAN FERGUSON
COMMITTEE CHAIR
AUDIT AND RISK COMMITTEE REPORT
82
Harbour Energy plc
Annual Report & Accounts 2024
Dear shareholder,
I am pleased to present this year’s
Audit and Risk Committee report.
The objective of this report is to provide a
summary of the Committee’s work to ensure
the interests of the company’s stakeholders
are protected through a robust risk
management framework and transparent
financial reporting.
Key activities during the year
Our focus in 2024 was on ensuring our
control systems remained effective through
the completion of the Wintershall Dea
transaction. The Committee held five
scheduled meetings during 2024 with
an additional meeting held to review and
approve financial and accounting items
related to the Wintershall Dea transaction.
A further two meetings were held in 2025,
prior to the publication of this Annual Report
& Accounts. In addition to the members of
the Committee listed on the previous page,
meetings were normally also attended by the
CEO, the CFO, the SVP Financial Reporting
& Tax, the SVP Internal Audit, the General
Counsel, the VP Corporate Reporting and the
company’s external auditors. Other senior
managers are required to attend when
significant audit and risk management
matters relating to their area of responsibility
are considered by the Committee.
During the year, the Committee met privately
with the CFO, the SVP Internal Audit and
the external auditors without management
present. In addition, I met privately with each
of these individuals and the external auditors
in between Committee meetings.
The Committee invested extensive time
during the year reviewing the processes in
place and judgements required to prepare
the company’s full and half-year results.
These included significant financial
reporting judgements, key accounting
estimates, climate change disclosures
and important internal control matters.
In particular, the Committee reviewed
significant financial reporting judgements
and estimates that have occurred in the
year and the clarity and completeness of
disclosures in the financial statements.
In this work, we carefully considered the
impact of the Wintershall Dea transaction
and integration, including the implications
on purchase price allocation and the
long-term resilience of the business, as well
as other matters such as decommissioning
and taxation. More detail about the work of
the Committee in relation to these financial
reporting judgements and estimates can
be found in the panel to the right.
Financial reporting judgements and estimates
Purchase price allocation
In assessing the purchase price allocation for
the Wintershall Dea transaction, the Committee
reviewed and challenged:
management’s key assumptions for valuing
the acquired assets. This included approval
of management’s long-term planning
assumptions for crude oil prices of $78/bbl
in real terms and UK NBP gas prices of
80 pence/therm in real terms;
valuations of intangible exploration and
evaluation (E&E) assets taking into account
the various valuations available which
comprise financial carrying values, expected
monetary valuations from discounted
cash flows and potential sale proceeds
from disposal initiatives;
management’s key assumptions for
decommissioning provisions; and
measurement of deferred tax liabilities
associated with the items above and
recoverability of deferred taxes.
Impairment and reversals of tangible
and intangible properties
In assessing indicators of impairment or
reversals of previous impairments of oil
and gas properties, the Committee:
reviewed and challenged management’s
key assumptions for oil and gas properties,
including the long-term planning assumptions
and future oil and gas prices; and
taking account of available market data,
approved management’s pricing assumptions
for crude oil and UK NBP that are used for
impairment testing (refer to note 2 to the
financial statements for more detail on page 135).
The Committee was satisfied that the most
significant assumptions on which the impairment
charges and reversals are based are: future
commodity prices, the discount rate applied to the
forecast future cash flows and decommissioning
provisions. The Committee judged the sensitivity
of the impairment charges to changes in the
commodity prices, as set out in note 12 to
the financial statements on page 162, to be
appropriate. The Committee also considered the
impact of climate change and carbon pricing on
the financial statements and concluded there was
unlikely to be a material impact on the financial
statements. Further information can be found in
note 2 to the financial statements on page 135.
The Committee assessed the carrying values
of E&E assets and whether any indicators of
impairment exist in relation to these assets.
The Committee reviewed the oil and gas resources
estimates and maturation reports provided
by management and was satisfied that the
corresponding E&E asset carrying balances
and income statement charges were aligned
with the resources reports.
Details of the company’s intangible E&E
assets are provided in note 11 to the financial
statements on page 160.
Oil and gas reserves and resources
The Committee considered reports from
management on the process used to determine
the oil and gas reserves and resources
estimates, looking in particular at whether the
methodology was generally accepted industry
practice and consistent with prior years, and
the experience and expertise of the managers
who prepared and reviewed the estimates.
The Committee noted that a material proportion
of the company’s proven and probable oil and
gas reserves and resources were audited by
independent reservoir engineers.
Provisions for decommissioning
The Committee discussed with management the
process and principal assumptions underpinning
the cost estimates for future decommissioning
activity. In particular, the Committee reviewed
the range of risk-free discount rates applied
compared to the prior year and was updated on
inflationary pressures, particularly on rig rates.
The Committee was satisfied that the approach
applied was reasonable and that the
combination of discount and contracted rig rates
used was appropriate. Further information on
decommissioning provisions is provided in note
21 to the financial statements on page 171.
Taxation
The Committee reviewed and discussed reports
from management associated with calculating the
Group tax provision for the period. Key areas of
review were judgements in relation to deferred tax
measurement and the reported effective tax rate
for the period. Refer to note 8 to the financial
statements for further detail on page 155.
The Committee noted that the net deferred tax
position continues to be a liability position and,
as a result of the Wintershall Dea transaction
and purchase price allocation, has increased
to $6.1 billion, primarily as a result of the high
tax rates in the new countries the company now
operates in. Further details of the deferred tax
assets and liabilities are provided in note 8 to
the financial statements on page 155.
Going concern
The directors are required to consider the
appropriateness of adopting the going concern
basis of accounting. The Committee reviewed
management’s projections of the company’s
liquidity position. Key assumptions in the
projections included those related to oil and
gas prices and production during the period.
The Committee is satisfied that the judgements
applied in making the assumptions and estimates
that underpin the forecasts and projections
are appropriate. The going concern statement
included on page 37 is fair and balanced.
83
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
AUDIT AND RISK COMMITTEE REPORT
CONTINUED
The Committee monitored the continued
independence and objectivity of the external
auditors and reviewed the quality and
effectiveness of the audit process, as
described in the auditor’s independence
and quality sections below.
The Committee monitored and reviewed the
company’s risk management and internal
control systems (our risk management
framework) in support of its duty to monitor
and review the overall effectiveness of the
framework on behalf of the Board and
oversaw the management of certain specific
risks assigned to the Committee, as described
in the risk management and internal control
section. The Committee also reviewed
preparations to meet the expanded future UK
Corporate Governance Code requirements
related to material control effectiveness.
The Committee received reports on the
outcome of internal audits conducted during
the period, reviewed and approved the
internal audit plan for 2025 and reviewed the
transition towards in-housing internal audit,
as described in the internal audit section.
The Committee received reports on
whistleblowing incidents and reviewed
an update on actions taken following an
independent third-party review of the
company’s broader compliance programme.
The Committee attended to several governance
matters. These comprised the review of several
company policies as part of an agreed Board
schedule to ensure the company’s policies and
statements remain appropriate, and preliminary
discussions on the planned external audit
tender process. The Committee also
reflected on its effectiveness as part of the
external Board and committee performance
review (see page 80 for more detail).
Quality of the external audit process
The Committee is responsible for assessing
the quality and effectiveness of the external
audit process. At the start of the audit cycle,
the Committee takes an appropriate amount
of time to review the auditor’s work plan and
their assessment of the significant areas of
risk in the financial statements, as this is the
foundation of a high quality audit. For 2024,
the significant areas of risk corresponded
with the financial reporting judgements and
estimates identified by the Committee, as
detailed on page 83. Having considered the
scope and matters arising through the year,
the Committee was satisfied that it did not
require the auditors to consider any new
audit matters.
Following the audit, we discussed the findings
with the auditors, including the challenges
made around the key accounting judgements
and estimates (details of which can be found
in note 2 to the financial statements on
page 135), including accounting for the
Wintershall Dea acquisition, the level of
adjusted and unadjusted errors identified
during the audit, the recommendations
made to management by the auditors
and management’s response.
In assessing the quality of the external audit
process, the Committee focused on:
the experience and expertise of the
audit team and, in particular, the way
the team was scaled up given the
significant change in the size and
complexity of the business;
the rigour and focus applied to preparing
the audit plan for the expanded business;
the fulfilment of the agreed audit plan
by the auditors and any variations from
the work plan;
the challenge and professional scepticism
shown by the auditors in their handling of
the key accounting and audit judgements;
the quality of the recommendations made
by the auditors for financial reporting
process and control improvements; and
the interactions of the audit team
with the Committee in and outside the
formal meetings.
In assessing how the auditor demonstrated
professional scepticism, the Committee
considered the quality and scope of the
questions raised by, and discussions
undertaken with, the auditor and, in
particular, the challenges on management
judgements, estimates and assumptions.
In addition, the Committee invited input from
management and senior finance staff utilising
a Committee-approved questionnaire. It also
reviewed a summary from the Ernst & Young
LLP (EY) UK 2024 audit quality report and
discussed EY’s internal control procedures,
applied to the Harbour audit. Following this
work the Committee judged that a quality
audit had been delivered.
Independence and objectivity
of the external auditors
The Committee is responsible for overseeing
the Board’s relationship with the external
auditors and assuring their continued
independence and objectivity. EY was
appointed in 2021 for a period of up to five
years following the completion of a limited
competitive tender process as part of the
merger as described in my 2022 report. Our
intention remains that the company will run
a full competitive tender process in 2025 for
the 2026 year audit. In preparation for this,
a plan has been agreed with the Committee
and contact has been made with a number
of audit firms to assess their willingness to
participate in the tender. The CFO and I have
met with those firms selected to tender and
with a number of audit partners in order
to select those who will lead the tender on
behalf of those firms. Those selected have
been discussed with, and approved by, the
Committee. The company is fully compliant
with the requirements of the Statutory Audit
Services Order 2014.
The Committee reviews the independence
and objectivity of the auditors on an ongoing
basis and takes into account the overall
relationship between the auditors and the
company. In conducting this review, the
Committee considered:
feedback from the company’s finance
function and the auditors;
the nature, extent and cost of non-audit
services provided by the auditors;
any recruitment of former employees
of the auditors; and
the safeguards the auditors have in place
to prevent loss of audit independence,
including the rotation of the audit
engagement partner which is required
every five years.
Our private meetings with the auditors
throughout the year, and my private meetings
with the lead audit partner in between
meetings, provide an opportunity for open
discussion with the auditors on a variety of
topics. Matters discussed included: the
auditor’s assessment of significant financial
risks and the performance of management
in addressing these risks; how they have
exercised challenge of management; the
auditor’s observations on management’s
role in fulfilling obligations to maintain
internal controls; the transparency and
responsiveness of management and
confirmation that no restrictions have been
placed on them by management; and
maintaining the independence of the audit.
The Committee approves the fees for the
full-year audit and half-yearly review after
reviewing the scope of work and reviews
the fees for non-audit assignments to
satisfy itself that the assignments concerned
do not give rise to threats to the auditor’s
independence and objectivity.
The Committee believes that certain
pre-defined non-audit work may be carried out
by the external auditors without compromising
their independence and reviews its policy
in this regard annually. Non-audit work is
allocated in line with the company’s policy
on the provision of non-audit services by the
external auditors and is approved by the
Committee. In 2024, this comprised services
relating to the review of the interim financial
statements of $0.2 million, transaction-related
84
Harbour Energy plc
Annual Report & Accounts 2024
services including reporting accountant
services relating to the Wintershall Dea
transaction of $1.5 million, and certain
agreed-upon-procedure engagements and
assurance over ESG metrics of $0.6 million.
The global audit fee for the 2024 external
audit work amounted to $6.7 million. Further
details of the fees paid are set out in note 5
to the financial statements on page 153.
The external auditors are required to confirm
to the Committee that they have both the
appropriate independence and objectivity
to allow them to continue to serve the
company. The Committee also requires the
external auditors to confirm that in providing
non-audit services, they comply with the
Ethical Standard (2019) issued by the FRC.
This confirmation was received for 2024.
Based on these reviews, the Committee
concluded that the independence of the auditors
has not been impaired and that the audit
process operated effectively during the period,
and it has reported accordingly to the Board.
Risk management and internal control
The Committee is responsible for monitoring
and reviewing the effectiveness of the
company’s risk management framework on
behalf of the Board. The risk management
framework is described on pages 60 to 62.
During the year, ahead of half-year and
full-year reporting, the Committee reviewed
the processes in place to assess the principal
and emerging risks facing the business, in
support of the Board’s assessment of these
risks. We also reviewed the model governing
the Board and its committees’ oversight
of the management of risk. This model is
designed to ensure all principal risks, and
the Board’s appetite (or tolerance) for these
risks, are given appropriate consideration
by the Board and its committees. We also
oversaw the management of specific principal
risks assigned to the Committee by the
Board. Topics included management-led
presentations on the continued development
of the risk-focused financial reporting internal
controls framework for both business and
IT general controls; information and cyber
security; legal and regulatory compliance;
and a review of several company policies.
The risk management framework also covers
the specific internal controls governing the
financial reporting process and preparation
of financial statements. We have clear
policies, standards and procedures for
ensuring we comply with relevant regulatory
reporting requirements and that these are
applied consistently across our financial
reporting teams and business areas involved
in preparing the financial statements.
The Committee seeks representations
from management regarding compliance
with relevant policies and the accuracy of
financial information on a biannual basis.
Detailed management accounts for each
reporting Business Unit are prepared
monthly and subject to management review.
These reports detail the performance and
cash flows of the business and support
our external financial reporting processes.
The Committee completed its annual review
of the effectiveness of the company’s risk
management framework during the period in
support of the Board approved statements
on the framework on page 62, including the
basis for our conclusion that the framework
remains effective. This review included
consideration of the company’s preparation
to meet the expanded future UK Corporate
Governance Code requirements related to
material control effectiveness.
The Committee has also completed its
annual review of the processes in place
to prepare the 2024 Annual Report &
Accounts and to ensure they are fair,
balanced and understandable in order
to support the Statement of directors’
responsibilities on page 117.
Internal audit
The company’s internal audit function
provides third-line assurance, as part of its
assurance model described on page 62.
During the year, the Committee received
reports on work undertaken to align with
the updated Institute of Internal Auditors
(IIA) Global Internal Audit Standards which
became effective in January 2025, as
well as internal audit findings, noting any
significant findings and monitoring the
close-out of any actions agreed arising
from these audits. These comprised audits
related to sales and marketing, financial
reporting controls, delegation of authority
and signing authority, and cyber security.
The Committee also received a summary
of other internal audits conducted over the
period which were reported to the other
Board committees that oversee those risk
areas. The Committee also reviewed the
outcomes of other key sources of assurance
conducted over the period. This included
the company’s compliance programme,
reserves reporting and cyber security testing.
The Committee reviewed progress on
the continued transition towards in-housing
internal audit, supported by co-source
arrangements, as agreed with the
Committee during 2023.
In addition, the internal audit team has
expanded in size and skills in response to
the Wintershall Dea transaction. Historic
work undertaken by Wintershall Dea’s
corporate audit function was discussed
with the Committee and relevant actions
tracked to closure.
The Committee reviewed and approved
the internal audit plan for 2025, including
its budget and resource requirements,
and approved the Internal Audit Charter
and department performance objectives.
The 2025 internal audit plan is targeted at
providing assurance on the effectiveness
of the management of the company’s most
significant risks and takes account of other
sources of assurance to avoid duplication.
The Committee also discussed the further
development of an audit and assurance
policy, which is due to be approved in 2025,
and will, amongst other matters, set out the
sources of assurance upon which the Board
and committees place reliance.
In conclusion
This year was an important one for the
Committee as the company completed
the Wintershall Dea transaction, which
fundamentally changed the size and
geographic footprint of our business. Our
focus was on ensuring the Group’s processes
and controls were robust such that we could
plan for an effective integration of reporting
requirements as well as dealing with matters
such as purchase price allocation and
the planning for internal and external audit
capacity to cover the enlarged portfolio.
Areas of focus for 2025, over and above
business as usual, include conducting the
audit tender and continued oversight of
the company’s preparation to meet the
expanded future UK Corporate Governance
Code requirements related to material
controls, including material controls beyond
financial reporting.
Alan Ferguson
Committee Chair
85
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Safety performance
30
Special topics
1
25
Assurance
15
External reporting and KPIs
10
HSES and net zero strategy
10
Governance and committee
performance review
10
HSES COMMITTEE REPORT
Role of the Committee
To monitor and review the
effectiveness of the implementation
of Harbour’s HSES strategy including
in relation to GHG emissions
To evaluate the effectiveness of
Harbour’s policies and systems
for delivering its HSES strategy
and managing HSES risk, including
review of mitigating actions,
determination of HSES risk appetite
and tolerance, and monitoring the
assurance programme
To monitor the quality and integrity
of Harbour’s internal and external
reporting of HSES performance
and issues
To assess the policies and systems
within Harbour for ensuring
compliance with HSES regulatory
requirements
2024 has been a transformational year
for the company; the Committee was
particularly pleased to see that management
prioritised the safety and wellbeing of our
workforce throughout the transition and
integration of the Wintershall Dea portfolio.
MARGARETH ØVRUM
COMMITTEE CHAIR
HSES culture
Ensuring safe, reliable and responsible operations
is a key dimension of our strategy. In building a
strong health and safety culture, we emphasise
that everyone who works for Harbour has the right
and responsibility to stop the job if a situation poses
safety risks.
Our commitment to a safety-first culture is reinforced
by our Board and HSES Committee, who oversee
HSES principal risks and performance. In addition,
the Leadership Team discusses safety every week,
with detailed reviews on a monthly basis, and safety
is a key focus of every global town hall.
Alongside health and safety, environmental
management and the wider aspects of climate
change are also important. To promote continuous
improvement, we include metrics on GHG emissions,
as well as on safety, in our annual bonus scorecard.
How the Committee spent its time during the year (%)
WELL POSITIONED
FOR THE FUTURE
Creating value
through continued
strategic delivery
SAFE & RESPONSIBLE
Ensure safe, reliable
and responsible
operations
FINANCIAL DISCIPLINE
Ensure financial strength
through the commodity
price cycle
SCALE & DIVERSITY
Maintain a high quality
portfolio of reserves
and resources
HIGH QUALITY & RESILIENT
Leverage our full cycle
capability to strengthen
our portfolio
Director
Meetings attended
Percentage
Margareth Øvrum (Committee Chair)
100%
Belgacem Chariag
2
75%
Simon Henry
100%
Hans-Ulrich Engel
3
100%
Attended
Not attended
1
This includes deep dive sessions on safety incidents and
decarbonisation updates.
2
Belgacem Chariag was unable to attend one meeting due to extenuating
circumstances. He received meeting materials and had the opportunity
to provide input to the Committee.
3
Hans-Ulrich Engel joined the Board and was appointed a member of the
HSES Committee on 3 September 2024. He attended all meetings he
was entitled to attend.
86
Harbour Energy plc
Annual Report & Accounts 2024
Dear shareholder,
I am pleased to report on the activities
of the Committee in 2024.
The Committee held four scheduled
meetings during the year. Hans-Ulrich Engel
joined the Committee on 3 September,
on completion of the Wintershall Dea
transaction. I welcome him and value his
input into Committee discussions, drawing
on his significant knowledge of the assets
acquired from Wintershall Dea, as well
as management of health, safety and
environmental issues in general.
2024 has been a transformational year for
the company; the Committee was particularly
pleased to see that management prioritised
the safety and wellbeing of our workforce
throughout the transition and integration
of the Wintershall Dea portfolio.
Visible HSES leadership remains key to
maintaining and deepening our safety-first
culture. During 2024, there was strong senior
leadership engagement including multiple
visits to the new locations acquired from
Wintershall Dea. During a visit to Aberdeen
in June, Board members met with UK
offshore installation managers and safety
representatives, which were excellent
opportunities to understand the safety issues
faced by Harbour’s offshore employees. They
also visited Bristow, a key supplier of aviation
services, completing a helicopter simulation
exercise and touring the facilities. In doing so,
they were able to gain a comprehensive
understanding of the supplier’s safety
approach and procedures (see page 73).
In October, we held our Global Safety Day, with
the theme ‘Because We Care’. This was the
first Group-wide event to take place following
the completion of the Wintershall Dea
transaction and provided an opportunity to
engage with colleagues around the world
and learn from our collective experience.
At each meeting, the Committee reviews
performance against our key performance
indicators which relate to safety and the
environment. These include our total
recordable injury rate, process safety events
and greenhouse gas (GHG) emissions.
The Committee reviews and endorses
any change to the structure of the bonus
scorecard regarding the target, weighting
and penalty to these metrics, as part of
the annual approval process.
Key activities during the year
Safety
In 2024, our total recordable injury rate
was higher than in 2023, largely due to the
changes in our business resulting from the
Wintershall Dea transaction. In the area of
process safety, we broadened our scorecard
metric to include incidents with lower impact
and introduced a mechanism to adjust the
score downwards in the event of Tier 1 or Tier 2
incidents, reinforcing the importance of
performance in this area. While our total
number of notable process safety events
declined year-on-year, we experienced one Tier 1
event and three Tier 2 events. (The impact on
the scorecard outcome is shown on page 106.)
To ensure we maximised the learning
opportunities from these incidents, all events
and injuries were rigorously investigated and the
Committee received updates on the outcomes
and actions taken by management, including
initiatives to drive improvement across our
expanded operational footprint. See page 41
for more information on our safety performance.
The Committee also received updates on
serious and high potential events, reviewing
12 such events in 2024.
Throughout 2024 the Committee was kept
abreast of the progress made to raise process
safety awareness across the company. Harbour
has continued to roll out and embed the
Process Safety Fundamentals across our
onshore and offshore operations, and continued
to provide site-based process safety training.
The Committee received updates on the 60
emergency response and crisis management
exercises undertaken. The Committee was
pleased to hear the positive feedback from
multiple sources on the quality and
effectiveness of the exercises.
GHG emissions and net zero
The Committee reviewed Harbour’s GHG
emissions performance, emission forecasts
and the effectiveness of Harbour’s
decarbonisation programmes.
The Committee also completed its annual
review of the company’s strategy in relation
to GHG emissions. It supported the retention
of previously agreed targets including a
50 per cent reduction in Scope 1 and 2
emissions on a gross operated basis by
2030 as compared to a 2018 baseline,
zero routine flaring by 2030, and a methane
intensity of less than 0.2 per cent by 2025.
In addition, the Committee supported
management’s recommendation to update
its net zero aspiration to 2050, in line with
most peer companies and in recognition of
evolving expectations in relation to the use
of carbon offsets.
Spills
The Committee also reviewed Harbour’s spill
performance, and noted a modest increase
in the volume of hydrocarbon releases to
the environment in 2024. See page 53 for
more information.
Risk
Harbour’s HSES principal risks, as
determined by the board of directors, include
the risk of a major HSES incident and climate
change risk. The Committee reviewed the
systems and processes established by
management to identify, assess, manage
and monitor these risks.
Reporting
The Committee reviewed and approved
Harbour’s HSES disclosures within the Annual
Report & Accounts, including Harbour’s net
zero strategy and the company’s reporting on
the Task Force on Climate-related Financial
Disclosures. It made recommendations to the
Audit and Risk Committee in relation to these
matters and received updates on the findings
of the external auditor’s limited assurance of
selected sustainability metrics in the
Annual Report & Accounts.
It also reviewed and approved Harbour’s
environmental and performance disclosure
in its CDP response, as well as preparations
for upcoming European Union regulations
including the Corporate Sustainability
Reporting Directive and the EU Taxonomy.
Assurance
The Harbour management system was
updated in 2024 to align with changes made
to the organisation following completion of the
Wintershall Dea transaction. We strengthened
the corporate HSES organisation, which is
responsible for Harbour’s HSES standards
and global procedures, and for providing
technical support and assurance across
the business. The Committee reviewed
and monitored Harbour’s HSES strategy
throughout the year and assessed the scope
and effectiveness of the HSES management
system to deliver the HSES strategy and
maintain regulatory compliance.
The Committee received regular updates
on HSES audit plans and progress on the
delivery of the annual HSES plan. It also
reviewed and approved Harbour’s policies
on HSES, major accident prevention
and sustainability.
Further information on Harbour’s HSES
culture and 2024 performance can be
found on pages 38 to 53.
The Committee also reflected on its
effectiveness as part of the external Board
and committee performance review
(see page 80 for more detail) and
highlighted key areas of focus for 2025.
Margareth Øvrum
Committee Chair
87
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Senior executive and
Chair remuneration
40
Reward structures
25
Governance, committee
performance review
and reporting
25
Wider workforce
remuneration
10
DIRECTORS’ REMUNERATION REPORT
Role of the Committee
Develop and maintain a
Remuneration Policy that
rewards fairly and responsibly,
and attracts, retains and
motivates employees to enable
the company to meet its
objectives, taking into account
the long-term interests of
employees, shareholders and
other long-term stakeholders
Consider and approve the
remuneration arrangements for
the Chair, the executive directors
and other senior executives as
determined by the Committee
Exercise oversight of the pay
and performance conditions
across Harbour
How the Committee spent its time during the year (%)
Our company has performed well in
many respects against an unpredictable
economic and geopolitical backdrop,
with continued strategic, operational
and financial delivery.
ANNE L. STEVENS
COMMITTEE CHAIR
Compliance statement
This report has been prepared in
accordance with Schedule 8 of the
Large and Medium-sized Companies
and Groups (Accounts and Reports)
(Amendment) Regulations 2013. The
Companies Act 2006 requires the
auditors to report to the shareholders
on certain parts of the directors’
remuneration report and to state
whether, in the auditor’s opinion, those
parts of the report have been properly
prepared in accordance with the
above regulations. The Chair’s annual
statement and the Remuneration
Policy report are not subject to audit.
The sections of the Annual Report
on Remuneration that are subject
to audit are indicated accordingly.
UK Corporate Governance Code Principle
How does the Board apply this Principle?
Further information
P.
Remuneration policies and practices should
be designed to support strategy and promote
long-term sustainable success. Executive
remuneration should be aligned to company
purpose and values, and be clearly linked to
the successful delivery of the company’s
long-term strategy.
Through long-term and short-term incentives, the 2025 Remuneration Policy
to be put to shareholders at the 2025 AGM is designed to drive a culture
that incentivises executives to deliver the company’s strategic objectives
and promotes long-term sustainable success and responsible long-term
stewardship of the share price.
Directors’ Remuneration Policy:
P94
Chair’s annual statement:
P89
Annual Report on
Remuneration:
P104
Q.
A formal and transparent procedure for
developing policy on executive remuneration and
determining director and senior management
remuneration should be established. No director
should be involved in deciding their own
remuneration outcome.
No director is involved in setting their own remuneration outcome. There is
a formal and transparent procedure in place to develop the Remuneration
Policy, which ensures that executive remuneration is set with consideration
of the wider workforce and benchmarking.
Directors’ Remuneration Policy:
P94
2024 Annual bonus
outcome:
P106
2022 LTIP outcome:
P107
R.
Directors should exercise independent
judgement and discretion when authorising
remuneration outcomes, taking account of
company and individual performance, and
wider circumstances.
The Remuneration Committee comprises only independent non-executive
directors to ensure independent judgement and discretion when reviewing
and authorising remuneration outcomes. The Committee determines outcomes
by assessing performance against a balanced scorecard of measures.
Chair’s annual statement:
P89
2024 Annual bonus
outcome:
P106
2022 LTIP outcome:
P107
Percentage change in directors’
remuneration and CEO pay
ratio:
P111
5
Remuneration
GOVERNANCE AT A GLANCE
PAGE 70
THE UK CORPORATE GOVERNANCE CODE IN ACTION
1
2
3
4
5
Director
Meetings attended
Percentage
Anne L. Stevens (Committee Chair)
100%
Alan Ferguson
100%
Andy Hopwood
100%
Louise Hough
100%
Attended
Not attended
88
Harbour Energy plc
Annual Report & Accounts 2024
Dear shareholder,
On behalf of the Board, I am pleased
to present Harbour’s directors’
remuneration report for the year
ended 31 December 2024.
This report contains an updated Directors’
Remuneration Policy (the Policy), for which
we are seeking shareholder approval this
year, alongside the 2024 Annual Report
on Remuneration. The Policy will be put to
a binding vote at the AGM on 8 May 2025
and the Annual Report on Remuneration
will also be put to an advisory vote.
During the year the Committee held six
scheduled meetings which all Committee
members attended.
Remuneration outcomes in 2024
Our company has performed well in many
respects against an unpredictable economic
and geopolitical backdrop, with continued
strategic, operational and financial delivery.
Completing the Wintershall Dea transaction has
transformed our scale and geographic diversity,
extended our reserve life, enhanced margins
and lowered GHG intensity. It was also a
fundamental step in achieving investment
grade credit ratings. Our workforce has
delivered on our operational plan, ensuring safe
operations, maximising the value of our existing
portfolio and advancing our organic growth
projects. Success from our capital investment
programme included first production from major
new projects in Argentina and in the UK, as
well as exploration and appraisal successes
and progress on potential future developments.
2024 annual bonus
Our annual bonus is based on a scorecard
of financial and non-financial performance
measures. Metrics which relate to financial
performance include free cash flow,
performance related to our capital investment
programme, operating costs and production
(which drives revenue). Together these
metrics represented 65 per cent of the 2024
scorecard. The remainder of the bonus was
based on safety and environment targets
in respect of the legacy Harbour business,
including stretching GHG emissions targets.
The Group retains a heavy focus on safety
performance, and in 2023 the Committee
agreed to expand the process safety metric
for 2024 to include incidents of less severity
than the Tier 1 and Tier 2 events previously
tracked and to include a scorecard deduction
in the event of any Tier 1 or Tier 2 event.
The scorecard measured the performance
of the legacy Harbour business only.
Overall, the scorecard outcome for 2024
is a payout of 59 per cent out of a maximum
of 200 per cent for executive directors
(ie 29.5 per cent of maximum), indicating an
overall performance somewhat below target.
The Committee reviewed the formulaic outcome
under the scorecard, in the context of the
Group’s financial and operational achievements
in the year, our HSES record and the executive
directors’ individual performance. We
determined that the formulaic outcome, whilst
disappointing, was appropriate as it reflected
operational and safety performance during the
year and therefore the final bonus outcome for
the executive directors was approved at 59 per
cent of target (29.5 per cent of maximum).
For the wider legacy Harbour workforce, excluding
executive directors, the Committee approved
a modest discretionary increase to 70 per cent
of target bonus, or 35 per cent of the maximum
achievable, to reflect the significant strategic
transformation achieved during the year as a
result of the Wintershall Dea transaction and the
incredible effort undertaken by the organisation
to deliver this.
Full details of the measures and targets,
together with the actual performance outcome
for each measure, are provided on page 106.
Vesting of 2022 LTIP awards
LTIP awards granted in 2022 were subject
to relative total shareholder return (TSR)
performance over three years, measured against
two comparator groups: the FTSE 100, and
a bespoke comparator group of sector peers.
Details of the bespoke comparator group are
listed in note 2 to the LTIP awards vesting table
on page 107. The company’s three-year relative
TSR performance was -16.1 per cent. This
performance was below median against both
the FTSE 100 TSR and the sector peer group.
Therefore no portion of the 2022 LTIP award
shall vest. As mentioned in my letter last year,
Harbour’s underperformance relative to
both peer groups is largely attributed to the
significant impact of the UK Energy Profits Levy
(EPL) on the company’s earnings, cash flow and
value when compared to the sector peer group
whose asset portfolios are generally much less
concentrated in the UK. As noted last year, the
UK EPL also impacted the 2021 vesting which
was nil and will continue to impact the vesting
levels in relation to the 2023 LTIP award.
The Committee reviewed the outcome and
determined that it would not exercise its discretion
to adjust the formulaic outcome, consistent
with prior years. Full details of the performance
calculation are provided on page 107.
Review of Directors’ Remuneration Policy
Our current Policy was renewed at the 2024
AGM, in line with the triennial cycle. In the
2023 Directors’ remuneration report, we
advised our shareholders that while we were
not making significant changes to the Policy at
that time, we would be undertaking a wholesale
review later in 2024, taking into consideration
the changes to the business resulting from
completion of the Wintershall Dea transaction.
The Wintershall Dea transaction completed on
3 September, ahead of schedule, creating one
of the world’s largest and most geographically
diverse independent oil and gas companies. Our
production has almost tripled to c.500 kboepd
and, with a lowering of our unit operating costs
from $16.4 per barrel to c.$13.5 per barrel (on
a pro forma basis), our margins are considerably
improved. Our 2P reserves have increased
to 1.2 billion boe, increasing our reserves life.
Importantly, the company’s asset base is no
longer concentrated in the UK, where (as noted
earlier) multiple adverse changes to the fiscal
regime had a material impact on the business.
We now have material new positions in Norway,
Germany, Mexico, Argentina and North Africa,
diversifying our portfolio considerably. As at
31 December 2024, the total market
capitalisation has risen to £4.3bn ($5.4bn)
(including capital held by LetterOne) from
£1.8bn ($2.3bn) prior to the announcement
of the Wintershall Dea transaction, positioning
the company near the top of the FTSE 250
index, close to the FTSE 100 entry point.
We have also increased our annual dividend
to c.$455 million, representing a five per cent
increase in dividend per ordinary share
to $0.2625.
The Committee reviewed the Policy in 2024,
taking into account the material changes to
the size, scope and geographic footprint of
our business, and the increased complexity
of the executive directors’ roles. We determined
to make the following material changes:
Introduction of a ‘hybrid’ long-term incentive
scheme, consisting of performance shares
and restricted shares, to provide a balanced
focus on delivering high performance outturns
above our peers and promoting responsible
stewardship of the share price over the longer
term. This aligns with the approach that has
been put in place for the wider LTIP population
for the last three years
Under the hybrid scheme, the CEO will receive
300 per cent of salary in performance shares
and 100 per cent of salary in restricted
shares, and the CFO will receive 240 per cent
of salary in performance shares and 80 per
cent of salary in restricted shares
An increase to the CEO’s bonus opportunity
from 200 per cent of salary to 250 per cent
of salary, reflecting the increased size and
scope of her role following the transaction
(no change for the CFO)
These are described further in this letter.
89
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Market positioning review
As a global company listed in the UK, the
Committee considers various reference points
when assessing the competitiveness of
executive packages. As noted in previous
directors’ remuneration reports, the Committee
sets out to offer packages that are sufficiently
competitive to attract and retain FTSE 100 or
Fortune 50 equivalent calibre global talent that
can deliver strategic change, significant growth
and strong shareholder returns. Therefore,
when the CEO and CFO were recruited in 2021,
their packages were set taking into account
FTSE 100 benchmarks, notwithstanding that
we were a FTSE 250 company at the time,
to reflect that we needed FTSE 100 level
expertise to develop and execute our ambitious
growth strategy, and to achieve our aspiration
to join that index.
The Wintershall Dea transaction was
completed ahead of schedule and would not
have been successful without the exceptional
skills demonstrated by our CEO and CFO to
identify and execute such a large and complex
transaction, the structuring of which included
the porting of bonds alongside the assets
being acquired, an agreed share price for the
Harbour equity component of the acquisition
consideration that was well above the trading
price at the time, and more than 15 regulatory,
anti-trust and foreign direct investment
approvals from governments and regulators
in more than 10 different jurisdictions.
Now that this phase of growth has been
completed, in order to successfully lead the
expanded business and develop the strategy
for further growth, we need to look beyond just
the UK talent pool. This has been particularly
highlighted in our recent search for a COO. The
candidates with the strongest credentials for the
role were mostly from outside the UK. The search
took a considerable amount of time, and the
package required to attract quality candidates
had to be competitive with those available to the
candidates from companies in other jurisdictions.
It should also be noted that our current CEO is
from the US, our CFO was recruited from Norway,
and other senior leaders are from Italy, Ireland,
Venezuela, Austria, Germany, Egypt and
Argentina, in addition to the UK.
Therefore, when considering the executive
directors’ packages as part of this review, we
looked at remuneration benchmarking data not
just for the UK, but also for international and
US sector peers, to give us a complete view of
the pay landscape across all the talent markets
in which we operate. We considered data from
the following range of comparator groups:
FTSE 30-100: As noted earlier, following
completion of the transaction, our market
capitalisation on 31 December 2024
positions the company close to entry into
the FTSE 100. We therefore chose the
FTSE 30-100 as a broad index benchmark
(excluding the top 30 companies as market
capitalisation and remuneration starts
to increase much more steeply)
FTSE market capitalisation group: As a
second UK benchmark, we looked at a
peer group of 50 companies closest to
Harbour Energy’s market capitalisation
(25 companies above and 25 below)
International oil and gas sector group: As
is reflected by our current senior leaders,
Harbour competes for talent in the global
market. We therefore considered pay data
from a selection of international oil and gas
peers (located in North America, the UK
and Europe). Harbour is positioned around
the middle of this group in terms of market
capitalisation
US oil and gas sector group: The US is an
important talent market for us, given the
number of high calibre executives with
deep sector experience based there. As
well as the CEO, our COO was recruited
from the US and has a wealth of US and
global experience. The Committee therefore
reviewed benchmark data for a group of
US oil and gas companies with a similar
profile to Harbour
The market total compensation data is
summarised in the charts on page 91. As might
be expected, the two UK comparator groups
show broadly aligned results, while the
international peer group shows a wider range
of total compensation (reflecting the range of
practice across the UK, Europe and the US)
and the US peer group is materially higher, given
the very different pay landscape in that market.
The Committee recognises the difference
in practice between pay structures in the US,
Europe and the UK, and the challenges of
setting pay at a level that aligns with the
benchmarks across the three markets. Since
2021, our approach has been to adopt a
‘mid-Atlantic’ mindset to executive remuneration,
which seeks to balance the need to compete for
talent with global sector peers, while aligning
with the expectations of a UK-listed company.
Pay levels have historically been set to recognise
the executive directors’ deep sector experience
and proven track record of delivering large-scale
initiatives at international oil and gas companies
and to reflect the global nature of the talent
market in our sector. In this context, pay levels
have been above UK norms but substantially
lower than practice at international oil and
gas peer companies.
The Committee’s approach has been to apply
these same principles when reviewing the
packages in the context of the increased size
of the business. We therefore did not seek
to match the US market but rather to remain
competitive enough to attract and retain the
top calibre of executives needed to execute
our strategy, while still operating a policy which
is acceptable to our UK investor base.
The recruitment process for a COO provided
important context here. In order to secure
a candidate with the necessary skills and
experience to fulfil this role in a business of our
size and geographic scale, the Committee had
to offer a package that was competitive with US
levels of compensation and, therefore, above
UK norms for the role. This highlighted the
reality of the level of pay required for top calibre
talent, and the need to ensure the packages
for the CEO and CFO remain attractive enough
to retain them over this next period of strategic
development. Furthermore, we were very
mindful of maintaining appropriate internal
relativities between the various members
of our Leadership Team.
A further data point we considered was the
history of realised pay at Harbour since 2021.
Given the challenges of setting long-term
financial targets in a cyclical industry,
particularly for a newly formed business, in
2021 the Committee considered that basing
the LTIP performance conditions fully on TSR
performance was appropriate and aligned
management with the shareholder experience.
Since then, performance has been measured
on a TSR basis relative to two peer groups: the
FTSE 100 and a bespoke comparator group
of sector peers which has remained broadly
consistent each year. As noted at the start of
this letter, for both the 2021 and 2022 LTIP
awards, Harbour underperformed both peer
groups, largely attributed to the significant and
disproportionate impact of the UK EPL. This
was particularly apparent when compared to
the sector peer group whose asset portfolios
are generally much less concentrated in the
UK. The UK EPL also continues to impact
vesting levels in relation to the 2023 LTIP
awards. Notwithstanding the adverse impact
of the EPL, the Committee determined not
to exercise any upward discretion in relation
to all incentive outcomes for 2022 and 2023.
Therefore, due to events beyond their control,
the CEO and CFO have not received any
payouts under the LTIP since the company
became public in 2021. This is misaligned with
outcomes for other senior leaders in Harbour
who receive a portion of their compensation
in restricted shares. The Committee is of the
view that remuneration received does not fairly
reward management for their performance
and contribution to the business since listing.
90
Harbour Energy plc
Annual Report & Accounts 2024
Increases to incentive pay opportunities
In view of the context mentioned earlier, the
Committee determined to increase the CEO’s
bonus opportunity from 200 per cent, to
reflect the increased size and scope of her role.
An opportunity of 250 per cent of salary is
competitive against UK benchmarks and
aligns with the typical opportunity levels seen
at US comparators. The CFO’s opportunity
is unchanged at 200 per cent of salary.
The difference in market practice between the
UK and US is most apparent for the long-term
incentive. Most of the US peers we reviewed
have a maximum LTIP opportunity for the CEO
of 700 per cent of salary or above, and operate
a hybrid incentive structure including both
performance shares and restricted shares.
The Committee therefore reviewed both the
structure and opportunity levels for the long-term
incentive. We sought to maintain broadly the
same market positioning as our previous policy,
albeit with a relative uplift in opportunity levels
to align with the increase to the size and scope
of the business and corresponding expansion
of the executive directors’ roles. This approach
results in opportunity levels which are
competitive relative to the UK market, but
which remain some way off the US market
range. These are set out in the next section.
New LTIP structure
We previously advised shareholders in our 2023
Directors’ remuneration report that we believed
a hybrid LTIP would work well as a framework for
Harbour. While we determined not to propose
a hybrid structure in our 2024 Policy, we advised
that we would continue to monitor evolving
practice in the area, as well as the context of
the Wintershall Dea transaction and consequent
transformational impact on the company. The
Committee has determined that it is now the
right time to proceed with introducing a hybrid
structure for the following reasons:
The combination of performance shares
and restricted shares will effectively
support the delivery of our strategy. As an
oil and gas company, our ultimate aim is to
generate value for shareholders throughout
the commodity price cycle. We therefore
need an incentive structure that promotes
long-term decision-making and ongoing
management of shareholder value over the
longer term. The Committee believes that a
hybrid LTIP will support this objective as the
performance shares element incentivises
executives to deliver improvement in
long-term company performance and to
outperform our peers, and the restricted
shares element encourages ongoing
stewardship of the business
The split of performance shares and restricted
shares and the overall maximum opportunities
will be as follows:
Performance
shares
Restricted
shares
Overall
opportunity
CEO
300%
of salary
100%
of salary
400%
of salary
CFO
240%
of salary
80%
of salary
320%
of salary
As noted earlier, the opportunity levels were
determined based on a 50 per cent discount
being applied to the restricted shares element
(ie if we had not been proposing the hybrid
structure, and retained a fully performance-based
LTIP, the proposed award to the CEO would
have been 500 per cent of salary).
The charts below illustrate the current and
proposed total maximum compensation levels
relative to the four benchmarking peer groups
described earlier. The levels for the CEO and
CFO reflect salary increases awarded to them
in late 2024.
£0
£2,000
£4,000
£6,000
£8,000
£10,000
£12,000
£14,000
£16,000
£18,000
US oil
and gas
International
oil and gas
FTSE market
cap group
FTSE
30-100
Pre-transaction
Post-transaction
Median
CEO maximum total compensation (£’000s)
£0
£1,000
£2,000
£3,000
£4,000
£5,000
£6,000
£7,000
US oil
and gas
International
oil and gas
FTSE market
cap group
FTSE
30-100
Pre-transaction
Post-transaction
Median
CFO maximum total compensation (£’000s)
As can be seen in the charts above, the impact
of the positioning relative to the international and
US peer groups does not materially change as a
result of the proposed Policy changes. The CEO’s
proposed total compensation is still materially
below the lower quartile for the US peer group,
and just above median for the international peer
group. The CFO’s proposed package is positioned
below the lower quartile of the US peer group, and
at the median for the international peer group.
It enables us to compete more effectively
for senior global talent, through the use of
an incentive structure commonly operated
at many of our international competitors.
In line with UK best practice, we operate a
number of features such as bonus deferral,
LTIP holding periods and post-employment
shareholding guidelines, none of which are
typically required in the US. The introduction
of a restricted shares element to the long-
term incentive goes some way to redress
this misalignment, and better position us
to attract talent from outside the UK
A restricted share element in the long-term
incentive also promotes retention of our
executives and, as a result, supports
succession planning
Given these benefits of a hybrid approach, it
has already been applied in the company for
managers below the executive director level.
Therefore, by adopting this hybrid design
for our executive directors, it will align them
with the compensation structure in place
for the other managers participating in our
LTIP programme
When designing the hybrid LTIP, the Committee
was mindful of shareholder expectations for
companies introducing restricted shares.
We have therefore structured the restricted
shares element to comply with best practice:
The opportunity level of the restricted
shares element will be discounted by
50 per cent, reflecting the increased
certainty of the awards
An underpin will apply, where the Committee
may reduce the vesting level based on its
assessment of financial and non-financial
performance over the vesting period
Awards will be subject to a total five-year
time horizon (three-year vesting period
and two-year holding period), with malus
and clawback provisions and a Committee
discretionary override clause, in line with
the current LTIP
When considering the appropriate balance
between the performance shares and restricted
shares elements, the Committee reviewed a
range of approaches. We determined that a split
of 75 per cent performance shares and 25 per
cent restricted shares was appropriate, so that
the package maintains a strong focus on
performance-based reward.
91
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Competitors’ market capitalisation interquartile
range of c.£1.5 billion to c.£9.5 billion.
£0m
£5m
£10m
£15m
£20m
Company 13
Company 12
Company 11
Company 10
Company 9
Harbour pre-completion
Company 7
Harbour post-completion
Company 5
Company 4
Company 3
Company 2
Company 1
Competitors’ market capitalisation interquartile
range of c.£3.5 billion to c.£17 billion.
£0m
£5m
£10m
£15m
£20m
Harbour pre-completion
Harbour post-completion
Company 7
Company 6
Company 5
Company 4
Company 3
Company 2
Company 1
DIRECTORS’ REMUNERATION REPORT
CONTINUED
A more detailed breakdown of the CEO’s
maximum total compensation positioning
against the international and US peer groups
can be seen in the charts on this page.
One-off awards
In addition to the changes described earlier,
the Policy provides for a one-off award to the
CEO and CFO.
The purpose of the one-off award is to
recognise the executive directors’ significant
contribution to the business since Harbour was
formed in 2021, culminating in the completion
of the Wintershall Dea transaction in 2024,
which has transformed Harbour from a
predominantly UK-focused business into one
of the world’s largest and most geographically
diverse independent oil and gas companies.
The Committee gave careful consideration
to the award value for the executive directors,
taking into account their significant track
record within the business. Prior to taking up
the CEO position in 2021, Linda Z. Cook was an
executive at EIG Global Energy Partners where
she helped to found Harbour Energy and then
developed and oversaw the strategy for
expanding it through three multi-billion dollar
transactions in a five-year period, the last of
which was the merger of Chrysaor and Premier
Oil to create Harbour Energy plc in 2021. On
joining Harbour Energy plc as CEO, she took a
significant reduction in her compensation, given
the very different executive pay landscape in
the UK compared to the US, meaning she has
been paid considerably less than her US
counterparts notwithstanding her significant
standing as one of the best in the industry. As
shown in the charts on the previous page, her
maximum package value prior to completion
of the recent transaction was less than half the
lower quartile of the US oil and gas peer group.
Since her appointment, the Board has been
continually impressed with her dedication,
drive and ambition for the business. Under
her leadership, heavily supported by the CFO
whom she personally recruited for his particular
expertise, Harbour has consistently upheld a
sustained quality of operational and financial
delivery and a disciplined approach to capital
allocation, all while meeting or exceeding our
stringent safety targets and maintaining
momentum on our sustainability commitments.
The Wintershall Dea transaction, which has
almost tripled the size of our business, would
not have succeeded without the executive
directors’ strategic vision, skills and experience,
which enabled Harbour to secure the deal and
execute a complex transaction, which included
the implementation of unique financial
structuring that required specialist knowledge
and expertise.
Unfortunately, these successes have been
overshadowed by the impact of the UK EPL,
which has significantly impacted Harbour since
its introduction in 2022, leading to results
that do not accurately reflect the company’s
underlying performance. Our profit after tax was
all but extinguished in 2022 and 2023. Since
then, the UK Government has extended and
increased the EPL on multiple subsequent
occasions, which has continued to affect our
business considerably. This has reduced our
cash flow (Harbour’s EPL payments have totalled
c.£1bn between 2022 and 2024) impacting
availability of debt and heavily weighing on our
share price. As noted earlier, this has contributed
to a nil vesting outcome under both the 2021
and 2022 LTIP awards (which are measured
entirely on relative TSR) and will continue
to impact the 2023 vesting outcome. The
Committee has to date not exercised any
discretion for the executive directors in respect
of the value of compensation forfeited as a
result of the EPL. This means the remuneration
outcomes for the executive directors have been
proportionally more impacted than the rest
of the LTIP population, who receive a portion
of their awards in restricted shares.
The Committee does not consider that the
executive directors’ realised compensation to
date has accurately reflected their contribution
to the business and it therefore determined
that it is appropriate for the executive directors
to be granted a one-off award to ensure that
their aggregate compensation more fairly
rewards them for their achievements since
their appointment.
The award for the CEO will have a value of
£7.5 million. This is approximately equivalent
to the maximum value of her LTIP opportunity
over the past three years (in total c.900 per cent
of her salary as at the beginning of 2024).
The award for the CFO will have a value of £1.25
million (c.200 per cent of his current salary).
We considered that this level of award would
meaningfully demonstrate the Board’s recognition
of the executive directors’ exceptional contribution
to the transformation of the business through
the successful delivery of the Wintershall Dea
transaction, despite numerous geopolitical,
economic and fiscal headwinds.
The award to the CEO will be made as a cash
payment shortly after the 2025 AGM, subject
to shareholder approval of the Policy. Given that
it is intended to recognise her contribution to
the business and the misalignment between
this and realised pay outcomes, the Committee
determined that it was not appropriate for it to
be subject to extended time horizons. The CEO
is already a substantial shareholder in the
business (owning c.2,500 per cent of salary
in Harbour Energy shares) and therefore is
already well aligned with the shareholder
experience. The CFO has not yet met his
shareholding requirement; therefore his award
will be delivered in shares, granted after the
2025 AGM and released in April 2026. Awards
will be subject to malus and clawback. They will
be provided for under the policy on a one-time
basis only, with no further awards of this nature
permitted according to the Policy terms.
The Committee recognises that while one-off
payments are fairly routine in the US market,
they are highly unusual in the UK market
and UK shareholders can view them with
scepticism. However, in view of past years’
compensation outcomes and the scale of the
transaction, we consider that it is appropriate
and fair that the executive directors are
rewarded for their achievements.
Shareholder consultation
An extensive shareholder consultation took
place in autumn 2024, and I was grateful
that so many shareholders took the time to
share their views. Over 80 per cent of the
share register were invited to consult, and the
Committee was pleased that over 66 per cent
of our register provided their feedback, as did
three major proxy agencies. The shareholders
we spoke to understood the rationale for
reviewing the Policy in the context of the
transaction, and noted the step-change
in the size, complexity and geographical reach
of the business. I was encouraged that many
indicated support for the hybrid long-term
incentive structure and recognised our
rationale as to why it was a good fit for Harbour.
We also received valuable feedback on the
one-off awards. Many shareholders were
sympathetic to the history of low realised pay
as a result of the EPL and acknowledged
CEO maximum total benchmarking detail:
international oil and gas peers
CEO maximum total benchmarking detail:
US oil and gas peers
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that the Committee has not correspondingly
exercised any positive discretion on incentive
outcomes; they were also very supportive
of the management team and their significant
achievements in delivering the transaction,
though were understandably more cautious
in their support for the one-off awards than for
the hybrid plan, given that such awards are not
standard UK practice. The Committee reflected
carefully on this feedback and considered that
it was important to proceed with the awards
for the reasons outlined earlier.
Salary levels
The Committee reviewed the salary levels
for the executive directors (and other senior
leaders under its remit) at the time of
completion of the Wintershall Dea transaction.
It was determined that salaries would be
increased to reflect the increased size and
scope of the executive directors’ role. The CEO’s
salary was increased from £888,250 to
£975,000 (a 9.8 per cent increase) and the
CFO’s salary was increased from £584,220 to
£625,000 (a 7.0 per cent increase). These took
effect from 4 September 2024, being the first
date after completion of the Wintershall Dea
transaction, to align with increases granted to
leaders in other roles. They include any merit
increase for 2025, which would have otherwise
been in line with the UK workforce increase
of 3.5 per cent. Salaries are therefore next
expected to be reviewed in April 2026.
The salary levels were communicated to
shareholders as part of the consultation
on the Policy.
Bonus and LTIP for 2025
The annual bonus will continue to be based
on a balanced scorecard of measures linked
to strategy and performance. There has been
one change to the weightings for the metrics
on the scorecard for 2025, which is a reduction
in the safety & environment component from
35 per cent to 30 per cent of the total award,
and an increase in the financial component
from 15 per cent to 20 per cent of the award.
This is to reflect an increased focus on cash
flow performance, as well as feedback from
shareholders that an increased weighting
towards financial measures would be
welcomed. In addition, the Committee
approved an increase to the deduction applied
to outcome for the process safety metric in the
event of any Tier 1 or Tier 2 events. The full list
of measures and weightings is on page 106.
The performance-based element of the LTIP will
continue to be based on relative TSR performance
compared to the FTSE 100 and the sector
comparator group. The Committee approved
several changes to the sector comparator group
for 2025. Marathon Oil delisted in November
following its acquisition by ConocoPhillips and
Hess Corporation was removed due to its
announced acquisition by Chevron. Two further
companies, Genel Energy and Capricorn Energy,
were also removed given their much smaller size
compared to other members of the group, and
the location of their operations being less
relevant to Harbour, particularly following the
Wintershall Dea transaction. Four new companies
were added, considered by the Committee to be
relevant in terms of size and geographic spread:
Woodside Energy and Santos Energy, two
Australian-listed independents with international
footprints; Talos Energy, a US-listed independent
with large operations in the US Gulf of Mexico
and a presence in Mexico; and Bluenord, a
Norwegian-listed independent primarily focused in
the Danish North Sea. The full list is on page 107.
A new set of LTIP rules are being proposed for
approval at the 2025 AGM and details of these
rules can be found in the Notice of Meeting.
These rules are largely the same as our
previous LTIP but have been updated to reflect
prevailing best practice.
Non-executive director fees
Fees for the Chair of the Board and the
non-executive directors were reviewed in the
year, taking into consideration the material
increase to the size and scope of the company
as a result of the Wintershall Dea transaction
and the increase in responsibilities. In this
context, it was determined that an increase
of 25 per cent would be applied to the Chair’s
all-inclusive fee, the basic fees for non-executive
directors and supplementary fees for the Senior
Independent Director and Board committee
chair roles. Full details of non-executive director
remuneration are set out on page 113.
Wider workforce remuneration
In accordance with the UK Corporate
Governance Code, the Committee regularly
reviews updates from management on wider
workforce remuneration policies and practices.
In late 2024, a new Global Share Award
Programme was introduced to enable all
employees globally to become shareholders in
Harbour and share in the company’s success.
All current employees will receive an award
of Harbour shares in 2025, strengthening
their alignment with shareholder interests.
A new Global Employee Share Purchase Plan
is being put to shareholders for approval at
our upcoming AGM which will enable ongoing
grants of share awards to employees, as well
as encouraging our global workforce to become
investors in our business.
The Committee regularly consults with
employees on reward and other matters.
Our Global Staff Forum provides staff with the
opportunity to engage with members of the
Committee and other non-executive directors
at least once a year, including on the topic of
executive remuneration. In June 2024, Louise
Hough and Andy Hopwood attended a Global
Staff Forum meeting where executive pay
was discussed. The CEO and Chief Human
Resources Officer were also in attendance.
The aim of the remuneration discussion was
to explain the alignment between executive
remuneration and wider company pay policy, as
well as describing the executive remuneration
outcomes for 2023. Feedback from these
sessions is then discussed at the Board and
the Remuneration Committee.
Conclusion
The Committee recognises that our proposed
changes to the Policy, when combined,
represent a significant increase in total
potential compensation. We firmly believe
that the changes are justified in the context
of a number of factors:
The executive directors consistently
demonstrate excellent performance, including
the execution of a number of significant
M&A and strategic initiatives since 2021,
culminating in the Wintershall Dea transaction
this year
The significant adverse impact of the EPL on
the business since its introduction in 2022,
which has directly impacted LTIP outcomes
The increased size and complexity of the
business following completion, recognising
that Harbour has transitioned from a
predominantly UK company to a global,
geographically diverse company with a
significant increase in production and
a materially higher market capitalisation
The ongoing challenge of competing for
talent in the global market, in particular
the pressing need to compete with US
companies in the sector, which has been
highlighted recently in our endeavours
to recruit high calibre executives for roles
below the Board
We are confident that the proposals will
enable us to attract, retain and reward
the senior talent that is crucial to the
ongoing delivery of our strategy and
future growth ambitions
I would like to thank those shareholders that
engaged with us on directors’ remuneration
during the year and look forward to further
engagement in future. I hope that you will be
able to support our Policy and remuneration
report at the upcoming AGM.
On behalf of the Committee, I would like to
thank all our stakeholders for their continuing
support. I would also like to thank Andy Hopwood
for his support whilst being a member of
the Committee.
Anne L. Stevens
Committee Chair
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DIRECTORS’ REMUNERATION REPORT
CONTINUED
The following sets out our Directors’
Remuneration Policy (Policy). This Policy is
being put forward to shareholders for their
binding approval at the AGM on 8 May 2025
and will apply to payments made from this
date. Details of how we intend to operate
this Policy for the 2025 financial year are set
out in the Annual Report on Remuneration
on pages 112 and 113.
Key principles of our Remuneration Policy
The objective of the Remuneration Policy is
to ensure it supports shareholder interests,
reinforces the business strategy and
promotes long-term sustainable success
and responsible stewardship of the share
price. Overall, the Committee aims to ensure
that pay rewards all employees fairly and
responsibly for their contributions.
Remuneration packages are intended to be
sufficiently competitive to attract, retain and
motivate individuals with the deep sector
knowledge and extensive listed company
experience required to achieve the Group’s
objectives and thereby enhance shareholder
value. In addition, the Committee aims to
ensure that the Remuneration Policy does
not raise environmental, operational, social,
safety or governance risks by inadvertently
motivating irresponsible behaviours.
The Committee sets out to offer packages
that are sufficiently competitive to attract
and retain FTSE 100 or Fortune 50
equivalent calibre global talent that can
deliver strategic change, significant growth
and strong shareholder returns. The current
executive Board members, who have been
in position since Harbour Energy plc was
formed in 2021, have demonstrated their
strong capabilities in executing a number
of M&A and strategic initiatives, culminating
in the completion of the Wintershall Dea
transaction in September 2024, which
transformed Harbour’s scale and geographic
diversification, delivering a strengthened
portfolio of diverse, high quality and cash
generative assets.
The Committee has updated the Policy in
the context of the expanded business, and
also to address the ongoing challenges
around remaining competitive in Harbour’s
evolving market for executive talent. As noted
in previous directors’ remuneration reports,
Harbour competes on a global playing field,
with many of our senior leaders coming from
outside the UK where there is more freedom
to set executive remuneration at competitive
levels. It is therefore imperative to strike an
appropriate balance between aligning with
UK institutional investor expectations and
ensuring the remuneration framework
supports the company to build and sustain
a pipeline of exceptional global talent to
deliver on its future strategic aims.
The new Policy contains changes to the
operation of the annual bonus plan and
long term incentive plan, and a one-off
arrangement for the CEO and CFO (all of
which are described further on pages 96
and 97).
Committee process in determining
the Remuneration Policy
The Committee discussed the Policy at
multiple meetings throughout 2024, building
on discussions held as part of previous
reviews of the executive remuneration
framework. This included a review of pay
benchmarking data for UK companies of a
similar size to the enlarged business, and for
US, UK and international oil and gas peers of
a similar size and/or with relevant operations.
The Committee recognised the discrepancy
in market practice in different jurisdictions
and sought to create a policy that bridged
the gap between the UK and particularly
North American competitors, but that did
not attempt to match the US market. The
wider market context was also considered,
including new remuneration proposals by
other large FTSE companies in response
to the recently heightened debate on the
competitiveness of the UK compared to
the rest of the world, along with latest proxy
and investor guidance in relation to this.
The Committee was mindful in its
deliberations on the new Policy of any
potential conflicts of interest and sought
to minimise them through an open and
transparent internal consultation process
with the executive directors and other
relevant members of senior management,
and by seeking independent advice from
its external advisers and including current
investor views solicited during consultation.
The Committee carried out an extensive
shareholder consultation on the proposed
changes to the Policy in late 2024. Over 80
per cent of the share register were invited
to consult, and the Committee was pleased
that over 66 per cent of the register took
the time to share their feedback, as did the
three major proxy agencies. We held a
number of valuable discussions, in which
shareholders acknowledged the step-change
in the size, complexity and geographical
reach of the business following the
transaction and the Committee’s rationale
for the changes to the ongoing Remuneration
Policy. We also discussed the one-off awards
to the CEO and CFO. In general, shareholders
were understanding of the reasons the
Committee was proposing the awards
and they were very supportive of the
management team and the value delivered
by the Wintershall Dea transaction; however,
they were mindful that such awards are
outside of UK best practice.
Directors’ Remuneration Policy
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Executive director Policy
The Policy for executive directors is set out below:
Salary
Purpose and link to strategy
To provide an appropriate level of salary to support recruitment and retention of executive directors of the calibre required
to deliver the Group’s strategy, and with due regard to the role and the individual’s responsibilities and experience
Operation
Typically reviewed annually with reference to company and individual performance, each executive’s responsibilities
and experience, the external market for talent, and salary increases across the Group
Salaries are reviewed taking into account market practice at other oil and gas sector companies in the UK
and internationally and UK-listed companies of a similar size to Harbour
Salary increases are normally effective 1 April
Opportunity
Whilst there is no maximum salary, increases will normally not exceed the typical increases awarded to other
employees in the Group
However, increases may be above this level in certain circumstances such as:
Where an executive director has been appointed to the Board at a lower than typical market salary to allow
for growth in the role, larger increases may be awarded to move salary positioning closer to typical market level
as the executive director gains experience
Where an executive director has been promoted or has had a change in responsibilities
Where the size and complexity of the company has changed materially
Where there has been a significant change in market practice
Performance metrics
Not applicable
Pension
Purpose and link to strategy
To help provide a competitive pension provision, facilitating the recruitment and retention of high-calibre executive
directors to execute the Group’s strategy
Operation
Executive directors are eligible to participate in the company’s defined contribution personal pension plan and/or
receive an equivalent cash supplement
The only pensionable element of pay is salary
Opportunity
Executive directors will receive pension contributions and/or an equivalent cash supplement in line with the
contribution for the majority of the UK workforce. Pensions for executive directors are currently set at 20 per cent of
base salary, in line with the rate for the company’s UK workforce. If the pension range of the company’s UK workforce
changes then the pension provision for executive directors would normally also change in line with the wider workforce
Performance metrics
Not applicable
Benefits
Purpose and link to strategy
To provide a benefits package competitive in the market for talent and to support the wellbeing of employees
Operation
Executive directors receive a competitive benefits package, which may include medical and dental insurance,
car allowance, life assurance, income protection cover, personal accident insurance, expatriate benefits, relocation
allowance, health checks and a subsidised gym membership
Where an executive director has been required to relocate to perform their role they may be provided with additional
benefits to reflect their circumstances, which may include items such as a housing allowance, flights home and tax
equalisation. Such benefits will be determined taking into account our expatriate policy for other employees who
are moving from their home location to take up their role
Other benefits may be introduced from time to time to ensure the benefits package is appropriately competitive
and reflects the circumstances of the individual director
Opportunity
Whilst there is no prescribed maximum, benefits will be set at a level which the Committee considers appropriate
for the role, location and individual circumstances
Performance metrics
Not applicable
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DIRECTORS’ REMUNERATION REPORT
CONTINUED
All-employee share plans
Purpose and link to strategy
To encourage share ownership in Harbour and increase the alignment of the executive directors’ interests to those
of stakeholders
Operation
Executive directors may participate in any all-employee share plans operated by the company on the same terms
as other employees
UK-based employees (including UK-based executive directors) may be invited to participate in the following tax
advantaged share plans:
Share Incentive Plan (SIP), under which employees may buy partnership shares using gross pay and the company
may then grant matching shares. Under the SIP, free shares may also be granted. Dividends may accrue on any
shares and be automatically reinvested
Save As You Earn (SAYE) scheme under which employees are invited to make regular monthly contributions over
three or five years to purchase shares through options which may be granted at a discount
Opportunity
Under the SIP, participants may participate up to HMRC prescribed limits
Under the SAYE, employees may save up to HMRC prescribed limits
For any other all-employee plan operated, executive directors may participate on the same basis as other employees
Performance metrics
Not applicable
Annual bonus
Purpose and link to strategy
To reinforce the delivery of key short-term financial and operational objectives and, through the deferred share
element, help ensure alignment with shareholders and support retention
Operation
Performance is normally measured on an annual basis for each financial year against stretching but achievable
financial and non-financial targets, comprising key performance indicators (KPIs), and other corporate objectives
Performance measures, weightings and targets are set at the beginning of the year and weighted to reflect business priorities
A proportion, normally at least 50 per cent, of any annual bonus earned is deferred in shares for three years. Where
the shareholding requirement has been met, awards will normally be delivered up to 75 per cent in cash and 25 per
cent in deferred shares
Deferred share awards may be granted in such form as determined by the Committee in accordance with the LTIP
rules including in the form of conditional shares and nil cost options
Dividend equivalents may accrue on deferred bonus awards granted under the LTIP and be paid on those shares
which vest. Dividend equivalent payments made under this Policy will be made in shares
Annual bonus payouts and deferred shares are subject to malus and clawback in the event of material misstatement
of the company’s financial results, gross misconduct, material error in the calculation of performance conditions or
other conditions, serious reputational damage, corporate failure, or in such other exceptional circumstances as the
Committee sees fit
The Committee may exercise malus and clawback until the later of: (i) two years from the payment of the bonus
or the vesting of the shares, or (ii) the completion of the second audit after payment/vesting
Opportunity
Up to 250 per cent of salary in respect of a financial year
Normally 50 per cent of the maximum pays out for target performance
Normally 0 per cent of the maximum pays out for threshold performance but the Committee may increase this
to up to 25 per cent of maximum if this is considered appropriate
Performance metrics
Performance is normally assessed against a corporate scorecard encompassing several performance categories,
which may include some or all of safety, environment, operations, growth/capital deployment, and financial. Other
measures may also be incorporated if this is considered appropriate
Normally, the Committee would not expect the weighting for any performance category in the corporate scorecard to be
higher than 50 per cent. However, it retains discretion to adjust weightings to align with the business plan for each year
The Committee retains the discretion to adjust outcomes in the event that they are not considered reflective of the
underlying business performance and/or wider circumstances over the vesting period
Directors’ Remuneration Policy
continued
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Long Term Incentive Plan: performance share and restricted share awards
Purpose and link to strategy
To incentivise executive directors to deliver sustainable long-term growth in shareholder value and promote responsible
stewardship of the business over a longer timeframe
Operation
The Committee may grant performance share awards and restricted share awards annually
Awards may be in the form of nil or nominal priced options or conditional shares
Performance share awards normally vest based on performance assessed over a period not shorter than three years
Restricted share awards normally vest subject to a performance underpin assessed over a period not shorter than
three years
Awards vesting are normally subject to a minimum two-year holding period such that the total time horizon is at least
five years (normally on a net of tax basis)
Dividend equivalents may accrue on performance share awards and restricted share awards. Dividend equivalent
payments made under this Policy will be made in shares
All performance share awards and restricted share awards are subject to malus and clawback in the event of
a material misstatement of the company’s financial results, gross misconduct, material error in the calculation
of performance conditions or other conditions, serious reputational damage, corporate failure, or in such other
exceptional circumstances as the Committee sees fit
The Committee may exercise malus and clawback until the later of: (i) two years from the vesting date or (ii) the
completion of the second audit after vesting
Opportunity
Executive directors may be granted awards up to 400 per cent of salary, of which no more than 100 per cent will
be in the form of restricted share awards. Performance share awards will normally vest at 25 per cent for threshold
performance, with full vesting for stretch performance. Vesting increases on a straight-line basis between threshold
and stretch
Performance metrics
For the performance share awards, the Committee will select performance measures and determine their weighting
for each cycle to ensure that they continue to be linked to the delivery of company strategy
The restricted share awards are normally subject to an underpin based on the Committee’s assessment of the
underlying business performance over the vesting period
The Committee retains the discretion to adjust the vesting outcomes in the event that these are not considered
reflective of the underlying business performance and/or wider circumstances over the vesting period
One-off award
This section relates to a one-off award only and does not enable the grant of future awards of this nature
Purpose and link to strategy
To fairly reward the CEO and CFO for their exceptional contribution to the business since their respective appointments
Operation
The Committee may make a one-off cash payment to the CEO and a one-off share award to the CFO shortly after the
approval of the Policy
The cash award to the CEO will be paid as soon as practicable after the AGM
The share award to the CFO will be granted as soon as practicable after the AGM and vest in April 2026
These awards will not have any performance conditions
Awards are subject to malus and clawback in the event of material misstatement of the company’s financial results,
gross misconduct, material error in the calculation of performance conditions or other conditions, serious reputational
damage, corporate failure, or in such other exceptional circumstances as the Committee sees fit
The Committee may exercise malus and clawback until the later of: (i) two years from the payment of the CEO’s cash
payment or the grant of the CFO’s shares, or (ii) the completion of the second audit after payment/grant
Opportunity
The award for the CEO will have the value of £7.5 million
The award for the CFO will have the value of £1.25 million
Performance metrics
Not applicable
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DIRECTORS’ REMUNERATION REPORT
CONTINUED
Share ownership
Purpose and link to strategy
Enhances the executive directors’ alignment with shareholders’ long-term interests while in employment and for
a period following departure through the building up of a significant shareholding in the company
Operation
The executive directors are expected to build up, and maintain, ownership of the company’s shares worth 300 per cent
of salary for the CEO and 250 per cent of salary for the other executive directors
Shares owned outright (including by persons closely associated), shares held in the Share Incentive Plan and any unvested
share awards which are no longer subject to performance (net of taxes) will normally count towards this requirement
The executive directors are also expected to retain no less than 50 per cent of the net value of shares vesting under
the company’s long-term incentive plans until such a time that the share ownership requirement is met
Following stepping down from the Board, executive directors are expected to retain their minimum shareholding
requirement immediately prior to departure for two years. Where their shareholding at departure is below the minimum
requirement, the executive director’s actual shareholding is expected to be retained for two years
Shares acquired from own resources are excluded from the post-cessation shareholding requirement. The Committee retains
discretion to exclude other shares from the post-cessation shareholding requirement if it considers it to be appropriate
The Committee intends to operate an appropriate enforcement mechanism of the post-cessation shareholding
requirement. The Committee retains discretion to waive or vary the post-cessation shareholding requirement
if it is not considered to be appropriate in the specific circumstances of an executive director’s departure
Opportunity
Not applicable
Performance metrics
Not applicable
Summary of changes to the Policy
A summary of the material changes to the Policy compared to the 2024 Policy is set out below:
Change to the Policy
Reason for change
Increase to annual bonus
opportunity from 200 per cent of
salary to 250 per cent of salary
Reflects the increased size and complexity of the company following completion of the Wintershall Dea transaction
Allows packages to be more competitive relative to other global oil and gas companies, ensuring Harbour’s
approach to executive pay remains attractive to current executive directors and any future appointments
The current intention is that this additional headroom will only be applied to the CEO’s bonus
Restructuring of LTIP award to
allow the grant of restricted shares
alongside performance shares,
with an additional opportunity of
100 per cent of salary delivered
as restricted shares
Ensures a balance of focus on driving high performance; building steady, sustainable share price growth; promoting
long-term stewardship of the business; supporting, attracting and retaining talent; and strengthening the alignment
of executives’ interests with those of shareholders
Aligns with the structure already in operation for LTIP participants below the Board
Provides better alignment with typical package structure in US companies, from which Harbour is likely to source
future executive talent
Provision for a one-time award
to the CEO and CFO
To recognise the executive directors’ significant contribution to the business since Harbour was formed in 2021,
culminating in the completion of the Wintershall Dea transaction in 2024, which has transformed Harbour from
a predominantly UK-focused business into one of the world’s largest and most geographically diverse independent
oil and gas companies
Other minor changes have been made to the wording of the Policy to aid operation and to increase clarity.
Further details on the Policy
Selection of performance conditions
For the annual bonus, the Committee believes that a mix of financial and non-financial targets is most appropriate for the Group. The use of a
corporate scorecard encompassing several performance categories ensures delivery of business milestones in a number of key areas. Performance
share awards will typically include a focus on relative stock market outperformance over the long term, in line with common practice in the oil and
gas sector, providing a strong indication of the Group’s long-term financial growth and the returns delivered to its shareholders. Restricted share
awards are subject to an underpin, typically based on the Committee’s assessment of underlying business performance during the vesting period.
The Committee retains discretion to amend a performance condition provided that any amended performance condition will be no more
or less fair, no less effective an incentive and not materially less demanding than the original target was when set.
Legacy arrangements
The Committee reserves the right to make any remuneration payments and/or payments for loss of office (including exercising any
discretions available to it in connection with such payments) notwithstanding that they are not in line with the Policy set out above, where the
terms of the payment were agreed (i) before 14 May 2014; (ii) before the Policy set out above came into effect, provided that the terms of
the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed; or (iii) at a
time when the relevant individual was not a director of the company (or other persons to whom the Policy set out above applies) and, in the
opinion of the Committee, the payment was not in consideration for the individual becoming a director of the company or such other person.
For these purposes, ‘payments’ includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares,
the terms of the payment are ‘agreed’ no later than at the time the award is granted. This Policy applies equally to any individual who is
required to be treated as a director under the applicable regulations.
Directors’ Remuneration Policy
continued
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Remuneration Policy for other employees
When determining the Policy, the Committee reviewed wider workforce remuneration and incentives to ensure the approach to executive
remuneration was compatible in this context. In late 2024, a new Global Share Award Programme was introduced to enable all employees
globally to become shareholders in Harbour and share in the company’s success. All current employees will receive an award of Harbour
shares in 2025, strengthening their alignment with shareholder interests. A new Global Employee Share Purchase Plan is being put to
shareholders for approval which will enable ongoing grants of share awards to employees, encouraging our global workforce to become
investors in our business.
The company’s policy for all employees is to provide remuneration packages which reward them fairly and responsibly for their contributions.
In addition to a competitive salary, employees are typically eligible for a performance-related bonus, pension and a number of benefits,
including expatriate benefits where relevant. In the UK, employees are eligible to receive at least the same proportion of salary in pension
contributions as the executive directors, in line with UK best practice. Specific bonus levels vary by job level and country to ensure annual
incentives support motivation, competitive pay and retention in the various markets in which we operate.
The Leadership Team and other senior leaders participate in the same annual bonus plan and long-term incentive plan as executive
directors. The Leadership Team and other senior leaders already receive a portion of their LTIP in restricted shares without performance
conditions. The proposed change for the executive directors described above enables alignment between their LTIP structure and that of the
other senior leaders. Performance for the annual bonus and performance shares, and the underpin for the restricted shares, is assessed
on the same criteria for executive directors and other senior leaders, though opportunity levels vary as appropriate. These schemes provide
a clear link between pay and performance, ensuring that superior remuneration is paid only if superior performance is delivered, with the
use of restricted shares acting as a complementary vehicle to ensure that packages are competitive for the sector.
The company currently operates SIP and SAYE share schemes for UK-based and UK expatriate employees, to foster a sense of ownership
in the company and to increase the alignment of interests across stakeholders. Participation levels among UK employees in these plans
is strong, outperforming market norms.
Incentive plan discretions
The Committee operates the company’s incentive plans according to their respective rules and the Remuneration Policy, and in accordance
with the Listing Rules and HMRC rules where relevant. The rules of the long-term incentive plan (the Harbour 2017 Long Term Incentive Plan)
were approved by shareholders at the 2017 AGM and amended at the 2020 AGM and again at the 2021 AGM. The rules of the 2025 Long
Term Incentive Plan will be put to shareholder approval at the 2025 AGM. All awards from that date on will be made under this plan.
In line with common market practice, the Committee retains discretion as to the operation and administration of these incentive plans,
including with respect to:
who participates;
the timing of grant and/or payment;
the size of an award and/or payment and any other terms of the award (within the plan and Policy limits approved by shareholders);
form of award (eg nil cost option or conditional award);
the manner in which awards are settled;
the choice of (and adjustment of) performance measures, targets and underpins in accordance with the Remuneration Policy and the plan rules;
in exceptional circumstances, amendment of any performance conditions and/or underpins applying to an award, provided the new
performance conditions and/or underpins are considered fair and reasonable and are not materially more or less challenging than the
original performance targets and/or underpins when set;
discretion relating to the measurement of performance or other condition in the event of a variation of share capital, change of control,
special dividend, distribution or any other corporate event which may affect the current or future value of an award;
determination of a good leaver (in addition to any specified categories) for incentive-plan purposes, based on the plan rules and the
appropriate treatment under the plan rules;
determination of the operation of the post-vesting holding period; and
adjustments required in certain circumstances (eg rights issues, share buybacks, special dividends, other corporate events, etc).
Any use of the above discretions would, where relevant, be explained in the Annual Report on Remuneration for the relevant year.
As appropriate, it might also be the subject of consultation with the company’s major shareholders.
Minor changes
The Committee may make minor amendments to the Policy set out above (if required for legal, regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without requiring prior shareholder approval for that amendment.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Illustration of application of the executive directors’ Remuneration Policy
The performance scenario charts below show the estimated remuneration that could be received by the current executive directors for 2025,
both in absolute terms and as a proportion of the total package under different performance scenarios. The assumptions underlying each
performance scenario are detailed in the table below:
Remuneration receivable for different performance scenarios
Fixed pay
2025 salary, as disclosed in the Annual Report on Remuneration on page 112
Estimated housing benefits of £120,000 for the CEO, £60,000 for the CFO
1
Pension contribution of 20 per cent of salary
Minimum
On-target
Maximum
Maximum
with share price growth
Annual bonus
Nil payout
Payout of 50 per cent of maximum
(125 per cent of salary for the CEO and
100 per cent of salary for the CFO)
Payout of 100 per cent of maximum
(250 per cent of salary for the CEO
and 200 per cent of salary for the CFO)
As per maximum
Long Term Incentive Plan
– performance share awards
Nil payout
Performance share awards vest at
50 per cent of maximum (150 per cent
of salary for the CEO and 120 per cent
of salary for the CFO)
Performance share awards vest in full
(300 per cent of salary for the CEO
and 240 per cent of salary for the CFO)
As per maximum with a
50 per cent share price
increase over three years
Long Term Incentive Plan
– restricted share awards
Nil payout
Restricted share awards vest at
100 per cent of maximum (100 per
cent of salary for the CEO and 80 per
cent of salary for the CFO)
Restricted share awards vest at
100 per cent of maximum (100 per
cent of salary for the CEO and 80 per
cent of salary for the CFO)
As per maximum with a
50 per cent share price
increase over three years
Note:
1
The actual value of housing benefits paid during the year is disclosed on page 105 of this report. Other benefits (including tax equalisation for the CEO) are not easily estimated and have
been excluded, with the actual value of these benefits received during the year disclosed on page 105 of this report.
The one-off awards to the CEO and CFO are not included in the scenario charts on the basis that they do not form part of the ongoing Policy.
The charts below illustrate the potential reward opportunities for the current executive directors for the four performance scenarios:
Chief Executive Officer (£’000s)
Minimum
100%
£1,290
Maximum (with 50%
share price appreciation)
On-target
26%
£4,946
25%
49%
Maximum
£7,628
17%
32%
51%
£9,578
14%
25%
41%
20%
LTIP
Share price appreciation
Annual bonus
Fixed pay
Chief Financial Officer (£’000s)
Minimum
100%
£810
Maximum (with 50%
share price appreciation)
On-target
30%
£2,685
23%
47%
Maximum
£4,060
20%
31%
49%
£5,060
16%
25%
39%
20%
LTIP
Share price appreciation
Annual bonus
Fixed pay
Note:
The valuation of annual bonus, performance share awards (PSAs) and restricted share awards (RSAs) for the on-target and maximum scenarios excludes share price appreciation, any
dividend accrual and the impact of any scale back of awards. PSAs vest after three years subject to TSR performance and continued employment. RSAs vest after three years subject
to performance underpins. PSAs and RSAs are subject to a holding period ending on the fifth anniversary of the date of grant of the awards.
Directors’ Remuneration Policy
continued
100
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Annual Report & Accounts 2024
Approach to remuneration of executive directors on recruitment
When determining the remuneration package for a newly appointed executive director, the Committee would seek to apply the following principles:
The package should be market competitive to facilitate the recruitment of individuals of sufficient calibre and global experience to lead
the business. At the same time, the Committee would intend to pay no more than it believes is necessary to secure the required talent
New executive directors will normally receive a base salary, benefits and pension contributions in line with the Policy described above
and would also be eligible to join the bonus and long-term incentive plans up to the limits set out in the Policy
In addition, the Committee has discretion to include any other remuneration component or award which it feels is appropriate taking into
account the specific circumstances of the recruitment, subject to the limit on variable remuneration set out below. The key terms and
rationale for any such component would be disclosed as appropriate in the remuneration report for the relevant year
Where an individual forfeits outstanding variable pay opportunities or contractual rights at a previous employer as a result of appointment,
the Committee may offer compensatory payments or awards, in such form as the Committee considers appropriate, taking into account
all relevant factors including the form of awards, expected value and vesting timeframe of forfeited opportunities
When determining any such ‘buyout’, the guiding principle would be that awards would generally be on a ‘like-for-like’ basis unless this
is considered by the Committee not to be practical or appropriate
The maximum level of variable remuneration which may be awarded (excluding any ‘buyout’ awards referred to above) in respect of
recruitment is 650 per cent of salary, which is in line with the current maximum limit under the annual bonus and LTIP
Where an executive director is required to relocate from their home location to take up their role, the Committee may provide assistance
with relocation (either via one-off or ongoing payments or benefits). Should an executive’s employment be terminated without cause by
the Group, repatriation costs may be met by the Group
In the event that an internal candidate is promoted to the Board, legacy terms and conditions would normally be honoured, including any
accrued pension entitlements and any outstanding incentive awards. If an executive director is appointed following an acquisition of, or
merger with, another company, legacy terms and conditions that are of higher value than provided in the Policy would normally be honoured
To facilitate any buyout awards outlined above, the Committee may grant awards to a new executive director relying: (i) on the exemption
in the Listing Rules which allows for the grant of awards to facilitate, in unusual circumstances, the recruitment of an executive director,
without seeking prior shareholder approval; or (ii) under any other appropriate company incentive plan.
Service contracts and exit payments and change of control provisions
Executive director service contracts, including arrangements for early termination, are carefully considered by the Committee and are
designed to recruit, retain and motivate directors of the quality required to manage the company. The service contract of each executive
director may be terminated on 12 months’ notice in writing by either party. Executive directors’ contracts are available to view at the
company’s registered office.
Details of the service contracts of the current executive directors are as follows:
Directors
Contract date
Unexpired term of contract
Linda Z. Cook
01.04.2021
Rolling contract
Alexander Krane
01.04.2021
Rolling contract
The company will consider termination payments in light of the circumstances on a case-by-case basis, taking into account the relevant
contractual terms, the circumstances of the termination and any applicable duty to mitigate. In such an event, the remuneration
commitments in respect of the executive director contracts could amount to one year’s remuneration based on salary, benefits in kind
and pension rights during the notice period, together with payment in lieu of any accrued but untaken holiday leave, if applicable.
There are provisions for termination with less than 12 months’ notice by the company in certain circumstances. If such circumstances were
to arise, the executive director concerned would have no claim against the company for damages or any other remedy in respect of the
termination. The Committee would apply general principles of mitigation to any payment made to a departing executive director and will
honour previous commitments as appropriate, considering each case on an individual basis.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
The table below summarises how performance share awards under the Harbour Energy 2025 Long Term Incentive Plan and annual bonus
awards are typically treated in different leaver scenarios and on a change of control. Whilst the Committee retains overall discretion on
determining ‘good leaver’ status, it typically defines a ‘good leaver’ in circumstances such as retirement with agreement of the company, ill health,
injury, disability, death, redundancy, or part of the business in which the individual is employed or engaged ceasing to be a member of the Group.
Event
Timing of vesting/award
Calculation of vesting/payment
Annual bonus/deferred bonus awards
‘Good leaver’
Annual bonus is normally paid at the same time as
to continuing employees but may be paid on departure
in compassionate circumstances
Unvested deferred bonus awards vest on the normal
vesting date (or, at the Committee’s discretion, on cessation
of employment)
The Committee has discretion not to defer part of the bonus
earned in the year of leaving
Annual bonus is paid only to the extent that any performance
conditions have been satisfied and is pro-rated for the proportion
of the financial year worked before cessation of employment
Unvested deferred bonus awards will vest in full
‘Bad leaver’
Not applicable
Individuals lose the right to their annual bonus and unvested
deferred bonus awards
Change of control
1
Annual bonus is paid and unvested deferred bonus awards
vest on the date of change of control
Annual bonus is normally calculated based on the extent that
any performance conditions have been satisfied, and will
normally be pro-rated for the proportion of the financial year
worked to the effective date of change of control unless the
Committee determines otherwise
Unvested deferred bonus awards will vest in full
Performance share awards and restricted share awards
‘Good leaver’
Awards vest on the normal vesting date subject to the holding
period (or earlier at the Committee’s discretion)
Unvested awards normally vest to the extent that any performance
conditions or underpins have been satisfied over the full
performance period or vesting period as applicable (or a shorter
period at the Committee’s discretion)
The number of unvested awards is normally reduced pro-rata to
take into account the proportion of the vesting period not served
‘Bad leaver’
Unvested awards lapse
Any vested shares subject to the holding period are forfeited
by bad leavers who leave due to gross misconduct, but normally
remain and are released at the end of the holding period for
other bad leavers (eg following resignation)
N/A
Change of control
1
Awards vest on the date of the event
Unvested awards normally vest to the extent that any performance
conditions or underpins have been satisfied and a pro-rata
reduction applies for the proportion of the vesting period not
completed unless the Committee determines otherwise
Note:
1
In certain circumstances, the Committee may determine that unvested deferred bonus awards, performance share awards and restricted share awards will not vest on a change
of control but will instead be replaced by an equivalent grant of a new award, as determined by the Committee, in the new company.
The leaver treatment for the CFO’s one-off award will be in line with the provisions for the restricted share awards outlined above.
Upon exit or change of control, SAYE and SIP awards will be treated in line with the plan rules.
If employment is terminated by the company, the departing executive director may have a legal entitlement (under statute or otherwise) to
additional amounts, which would need to be met. In addition, the Committee retains discretion to settle other amounts reasonably due to
the executive director, for example to meet the legal fees incurred by the executive director in connection with the termination of employment,
outplacement support, where the company wishes to enter into a settlement agreement (as provided for below) and, in which case, the
individual is required to seek independent legal advice.
In certain circumstances, the Committee may approve new contractual arrangements with departing executive directors including (but not
limited to) settlement, confidentiality, restrictive covenants and/or consultancy arrangements. These will be used sparingly and only entered
into where the Committee believes that it is in the best interests of the company and its shareholders to do so.
Directors’ Remuneration Policy
continued
102
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Annual Report & Accounts 2024
External appointments
Executive directors are entitled to accept non-executive director appointments outside the company and retain any fees received providing
that the Board’s prior approval is obtained.
Consideration of employment conditions elsewhere in the company
While the Committee did not consult with the wider workforce when developing this Policy, more broadly, it receives feedback from employees
through engagement opportunities such as the Global Staff Forum, where staff have the chance to engage with members of the Committee
and other non-executive directors at least once a year on executive remuneration. The Committee considers the pay and conditions
elsewhere in the company, including how company-wide pay tracks against the market. When determining salary and pension for executive
directors, the Committee takes account of salary increases and pension contributions across the Group, particularly for those employees
based in the UK. The Committee ensures that our policies and practices across the business are fair and consistent, and support diversity
and equality. Further, the company seeks to promote and maintain good relationships with employee representative bodies – including trade
unions – as part of its employee engagement strategy and consults on matters affecting employees and business performance as required
in each case by law and regulation in the jurisdictions in which the company operates.
Consideration of shareholder views
The Committee aims to ensure that the Policy serves shareholder interests and is aligned with the Group’s business strategy, market
practice and evolving best practice. The Committee Chair engaged with major shareholders (representing over 66 per cent of the register)
and proxy advisers in developing this Remuneration Policy, and will also from time-to-time engage to discuss the Remuneration Policy more
generally. The Committee considers all feedback received from such consultations, as well as guidance from shareholder representative
bodies more generally, to help to ensure the Policy is aligned with shareholder views.
Non-executive director Remuneration Policy
Non-executive directors’ appointments and subsequent re-appointments are subject to annual re-election by shareholders at each Annual
General Meeting (AGM) in accordance with the UK Corporate Governance Code. All letters of appointment have a notice period of three
months, which can be given by either party at any time. Where notice is given by the company, the non-executive director may (at the
company’s absolute discretion) receive a payment in lieu of three months’ director fees. Otherwise, the letters of appointment provide
for no other arrangements under which any non-executive director is entitled to receive remuneration upon the early termination of his
or her appointment. Non-executive directors’ letters of appointment are available to view at the company’s registered office.
The company’s articles of association provide that the remuneration paid to non-executive directors is to be determined by the Board within
limits set by the shareholders. The Policy for the Chair and non-executive directors is as follows:
Non-executive director fees
Purpose and link
to strategy
To provide fees that allow Harbour to attract and retain non-executive directors of the highest calibre that add value to our business
Operation
Fees for non-executive directors are normally reviewed at least every two years
Fees are set with reference to UK and international oil and gas sector companies and UK-listed companies of a similar size to Harbour
Fees paid to the Chair are determined by the Committee, while the fees of the other non-executive directors are determined by the Board
Additional fees may be paid to reflect additional Board or committee responsibilities as appropriate
Fee increases are normally effective 1 April
The non-executive director fees are summarised in the Annual Report on Remuneration on page 113
Reasonable costs in relation to travel and accommodation for business purposes are reimbursed to the Chair and non-executive
directors. The company may meet any tax liabilities that may arise on such expenses
A travel allowance may be provided where intercontinental travel is required to attend a meeting
The Chair and non-executive directors are not entitled to participate in any of the Group’s incentive plans or pension plans
Additional benefits may be provided to non-executive directors if considered appropriate
Opportunity
Non-executive director fees are set at a level that is considered appropriate in the light of relevant market practice and the
size/complexity of the role
Aggregate fees are within the limit approved by shareholders in the articles of association
Performance metrics
Not applicable
Approach to non-executive director recruitment remuneration
In the case of hiring or appointing a new non-executive director, the Committee will follow the Policy as set out in the table above.
103
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Committee membership and operation
Committee members
Date of appointment
to the Committee
Meetings attended
(eligible to attend)
Anne L. Stevens (Committee Chair)
31 March 2021
6(6)
Alan Ferguson
31 March 2021
6(6)
Andy Hopwood
1 November 2022
6(6)
Louise Hough
1 May 2023
6(6)
Committee terms of reference
The Committee acts within written terms of reference which are reviewed regularly and published on the company’s website: harbourenergy.com.
The terms of reference were reviewed in 2018 with amendments made in order to comply with the 2018 UK Corporate Governance Code.
Minor amendments have been made in subsequent years, most recently in August 2024.
The main responsibilities of the Committee include:
determining the Remuneration Policy for executive directors and senior management and engaging with the company’s principal
shareholders thereon;
determining the individual remuneration packages for each executive director, other members of senior management, and any changes thereto;
approving the remuneration package of the Chair;
considering the design of, and determining targets for, the annual bonus plan;
reviewing and recommending to the Board the establishment of any new employee share plans and any material amendments to the
company’s existing share plans;
determining the overall quantum and performance conditions and/or underpins for long-term incentive awards;
reviewing pension arrangements, service agreements and termination payments for executive directors and senior management;
approving the directors’ remuneration report, ensuring compliance with related governance provisions and legislation;
reviewing the UK Gender Pay Gap report and the actions being taken towards reducing the gap;
reviewing bonus outcomes for the company, including executive directors; and
considering the remuneration policies and practices across the company.
Advisers
The Committee receives advice from independent remuneration committee advisers Deloitte LLP. Deloitte LLP were appointed by the Committee
in March 2021 following a competitive tender process.
The fees charged for the provision of independent advice to the Committee during the year were £190,000 from Deloitte LLP. Other than
in relation to advice on remuneration, Deloitte LLP provided support to management in relation to corporate tax, indirect tax, payroll taxes,
internal audit, internal controls, financial advisory services in relation to mergers and acquisitions, and other related services.
Deloitte are founding members of the Remuneration Consultants Group and voluntarily operated under its code of conduct in dealings
with the Committee. The Committee is satisfied that the Deloitte engagement team, who provided remuneration advice to the Remuneration
Committee, do not have connections with Harbour Energy plc or its directors that may impair their independence.
During the year, the Committee also took into account the views of the Chief Executive Officer and other members of management.
Their attendance at Remuneration Committee meetings was by invitation from the Committee Chair to advise on specific questions raised
by the Committee and on matters relating to the performance and remuneration of the senior management team. No director was present
for any discussions that related directly to their own remuneration.
Annual Report on Remuneration
104
Harbour Energy plc
Annual Report & Accounts 2024
Voting on remuneration matters
Votes received at the 2024 AGM in respect of approval of the Annual Report on Remuneration and the Directors’ Remuneration Policy
are set out below:
Resolution
Votes FOR and % of votes cast
Votes AGAINST and % of votes cast
Votes WITHHELD
Annual Report on Remuneration (2024 AGM)
522,639,855
95.67%
23,642,500
4.33%
31,905
Directors’ Remuneration Policy (2024 AGM)
531,510,338
97.30%
14,761,768
2.70%
42,154
Single total figure of remuneration for executive directors (audited)
Executive
directors
Year
Salary
1
£’000
Taxable
benefits
2
£’000
Pension
£’000
Total fixed
remuneration
£’000
Bonus
£’000
LTIP
3
£’000
Total variable
remuneration
£’000
Total
remuneration
£’000
Linda Z. Cook
2024
904.4
1,424.9
178.3
2,507.6
533.6
533.6
3,041.2
2023
850.0
615.4
125.6
1,591.0
816.0
816.0
2,407.0
Alexander Krane
2024
586.3
164.1
100.7
851.1
345.9
345.9
1,197.0
2023
540.8
132.7
69.7
743.2
519.1
519.1
1,262.3
Notes to 2024 figures (unless stated):
1
The executive directors’ salaries were increased effective 4 September 2024, the date immediately following the completion of the Wintershall Dea transaction. Linda Z. Cook’s salary
was increased from £888,250 to £975,000 (an increase of 9.8 per cent) and Alexander Krane’s salary was increased from £584,220 to £625,000 (an increase of 7.0 per cent).
The figures shown above are therefore the aggregated pro-rated salaries for the two periods.
2
The executive directors receive a benefits package aligned with the approach for other employees. In 2021, Linda Z. Cook and Alexander Krane relocated from the US and Norway
respectively to join Harbour Energy and they are entitled to receive the same expatriate benefits as other employees relocating internationally. They both elected not to take the full
expatriate benefits available to them, and their benefits are therefore limited to housing costs and two return flights home per year as well as tax equalisation arrangements. Alexander
Krane received £60,000 in respect of housing costs during the year and his benefit figure also includes £52,779.63 in respect of tax equalisation payments for his housing allowance.
Linda Z. Cook received £120,000 in respect of housing costs during the year and her benefit figure also includes £1,180,853.99 in respect of a tax equalisation benefit. Given Linda was
required to relocate from the US to the UK to take up the role of CEO, tax equalisation is provided to ensure that she is not required to pay more tax in the UK than she would do in the US.
As outlined in the Notice of 2021 AGM, the Committee approved the provision of these benefits to the executive directors for an initial three-year period. The Committee considers it
appropriate to continue providing these benefits, including the housing allowance, given the executive directors’ criticality to the business.
3
No portion of the executive directors’ LTIP performance share awards vested during the period.
Single total figure of remuneration for non-executive directors (audited)
Non-executive directors
Year
Base fees
2
£’000
Travel
allowance
3
£’000
Expenses
4
£’000
Total
remuneration
£’000
R. Blair Thomas (Chair)
1
2024
334.6
30.0
6.5
371.1
2023
300.0
20.0
3.7
323.7
Simon Henry
2024
153.0
3.7
156.7
2023
140.0
3.0
143.0
Belgacem Chariag
5
2024
115.1
20.0
11.2
146.3
2023
70.0
8
20.0
8.4
98.4
Dirk Elvermann
6,7
2024
39.3
3.1
42.4
2023
Hans-Ulrich Engel
6
2024
39.3
3.4
42.7
2023
Alan Ferguson
2024
131.7
0.6
132.3
2023
120.0
0.7
120.7
Andy Hopwood
2024
120.1
3.8
123.9
2023
110.0
3.3
113.3
Louise Hough
5
2024
125.1
0.4
125.5
2023
76.7
0.1
76.8
Margareth Øvrum
2024
126.3
9.0
135.3
2023
115.0
6.0
121.0
Anne L. Stevens
2024
126.7
30.0
17.3
174.0
2023
115.0
25.0
12.4
152.4
Notes to 2024 figures (unless stated):
1
The base fees for R. Blair Thomas were paid to EIG.
2
In addition to base fees for acting as a non-executive director, base fees include amounts payable for acting as a member or Chair of a Committee, and fees for the Senior Independent
Director role. Further detail on the level of these fees is set out on page 113. The Board Chair waived his fees for acting as Chair of the Nomination Committee.
3
In accordance with the Remuneration Policy approved by shareholders in May 2024, R. Blair Thomas, Anne L. Stevens and Belgacem Chariag received an allowance for intercontinental
travel during 2024.
4
Amounts disclosed relate to taxable travel and accommodation expenses paid to non-executive directors in respect of qualifying services during the year.
5
Belgacem Chariag and Louise Hough were appointed to the Board on 1 May 2023. The 2023 fees reflect the time served as non-executive directors since that date.
6
Dirk Elvermann and Hans-Ulrich Engel were appointed to the Board on 3 September 2024. Their fees reflect the time served as non-executive directors since that date.
7
The base fees for Dirk Elvermann were paid to BASF SE.
8
Restated fees for Belgacem Chariag in respect of the 2023 financial year.
105
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
2024 Annual bonus outcome (audited)
The maximum bonus opportunity for executive directors in respect of 2024 was 200 per cent of salary. The scorecard below summarises the
Group’s performance against the financial and operational targets set by the Board for 2024 that are used to determine the level of bonus
awarded. The scorecard was set prior to the completion of the Wintershall Dea transaction and therefore reflects only the performance over
the year of the legacy Harbour business. This is the basis for determining bonus outcomes for legacy Harbour employees, including the
executive directors.
Category
Metric
Weighting
2024 performance
Scorecard
Actual
Weighted
Threshold
Target
Stretch
Safety &
environment
(35%)
Safety incident rate
TRIR incident rate/
million hours
10%
0.93
6%
1.05
0.85
0.60
Process safety
1
Tier 1, Tier 2 and
Tier 3 events
10%
6
0%
14
10
6
GHG emissions
ktonnes CO
2
e
15%
1,202
20%
1,400
1,260
1,100
Operations
(30%)
Oil and gas production
kboepd
20%
160
14%
150
164
170
Unit operating costs
$/boe
10%
19.7
0%
19.0
17.6
17.0
Growth &
capital
deployment
(20%)
Expenditure vs AFE
%
10%
97
12%
120
100
85
Reserves vs AFE
%
10%
87
4%
80
100
120
Financial
(15%)
Free cash flow
Million $
2
15%
129
3%
60
400
790
Total
59%
Notes:
1
The outcome for the process safety metric was reduced to zero as a result of the severity of three of the incidents during the year.
2
Free cash flow is post-tax, pre-dividend and pre-share buyback.
Summary of performance
Safety & environment
Safety incident rate: Between threshold and target with the total recordable injury rate of 0.93.
Process safety: For the first time, in addition to tracking Tier 1 and Tier 2 events, a subset of Tier 3 events was included in this measure.
For the Harbour legacy business, a total of six events were recorded, a record low for the company. However, one of these events was
classified as Tier 1 and two were classified as Tier 2. Therefore, in line with the design framework, the process safety score was reduced
to a threshold rating of nil.
GHG emissions: Emissions of 1,202 ktCO
2
e were better than target. This largely reflected the ongoing success of decarbonisation projects
during the year.
Operations
Production: 2024 production was 160 kboepd, being just short of on-target.
Unit operating costs: Unit costs were $19.7 per boe, which was just above threshold. This was caused by general cost increases,
FX movements and lower than forecast production volumes.
Growth & capital deployment
Expenditure vs AFE: Expenditure of 97 per cent was better than target, reflecting more rigorous cost performance for capital projects.
Reserves vs AFE: Performance of 87 per cent, which was just above threshold, reflecting lower oil and gas volume outcomes from capital investments.
Financial
Free cash flow: Cash flow generation of $129 million was below target, reflecting lower volumes and UK gas prices.
The calculated score was 59 per cent of the target bonus or 29.5 per cent of maximum achievable. The Committee determined that the
formulaic outcome, whilst disappointing, was appropriate as it reflected operational and safety performance against targets during the year.
Therefore the final bonus outcome for the executive directors was approved at 59 per cent of target (29.5 per cent of maximum).
Annual Report on Remuneration
continued
106
Harbour Energy plc
Annual Report & Accounts 2024
However, for the wider legacy Harbour workforce, excluding executive directors, the Committee approved a modest discretionary increase
to 70 per cent of target bonus or 35 per cent of the maximum achievable to reflect the significant strategic transformation achieved during
the year as a result of the Wintershall Dea transaction and the incredible effort undertaken by the organisation to deliver this.
Amounts paid to executive directors are set out below. In line with the 2024 Remuneration Policy, for executive directors that have met their
shareholding requirement, 25 per cent of the bonus paid will be deferred into shares for three years, and for other executive directors 50 per
cent of the bonus paid will be deferred into shares for three years. Linda Z. Cook has met her shareholding requirement and her bonus
is therefore subject to the lower deferral rate. Alexander Krane is working towards his shareholding requirement and therefore 50 per cent
of his bonus will continue to be deferred.
Directors
Bonus as a %
of maximum
Total value
£’000s
Cash amount
£’000s
Amount deferred
into shares
£’000s
Linda Z. Cook
29.5%
533.6
400.2
133.4
Alexander Krane
29.5%
345.9
172.9
173.0
LTIP awards vesting in respect of the year ended 31 December 2024 (audited)
LTIP awards were granted to the executive directors in 2022. Awards were subject to relative TSR performance conditions over the three
years to 31 December 2024. The structure and performance outcome were as follows:
Performance element
Weighting
Minimum
performance
Mid
performance
Maximum
performance
Actual
performance
Vesting
outcome
Relative TSR
performance vs
FTSE 100 index
1
50%
25% vesting at
median performance
(50
th
percentile)
Linear vesting
between minimum and
maximum performance
100% vesting if in the
upper quartile
(75
th
percentile)
–16.1%
(Below median)
0
Relative TSR vs bespoke
peer group of oil and gas
companies
2,3
50%
–16.1%
(Below median)
0
Notes:
1
Constituents of the FTSE 100 as at the start of the performance period on 1 January 2022.
2
Selected oil and gas peer group, including European and US independent oil and gas companies. The group consists of the following 16 companies: Aker BP, Apache Corp, bp,
Capricorn Energy, Diversified Energy, Energean, Genel Energy, Hess, Kosmos Energy, Marathon Oil, Murphy Oil, Shell, Seplat Energy, Tullow Oil, Vermillion Energy and John Wood Group.
As announced in the 2022 Directors’ remuneration report, the Committee determined to remove Lundin Energy (now Orrön Energy) from the peer group for inflight awards as it was no
longer a relevant comparator.
3
The bespoke oil and gas peer group was incorrectly disclosed in the 2022 DRR, with the 2023 constituents shown rather than the 2022 constituents.
Based on the above performance levels, the vesting outcome was 0 per cent. The Committee considered whether to exercise any discretion
to amend the formulaic outcome, and determined that the outcome was appropriate in the context of company performance in the round.
The amounts vesting to the executive directors are therefore as follows:
Executive directors
Vesting outcome
(% of maximum)
Value of shares vesting
£’000s
Value of dividend
equivalents accrued
£’000s
Total
£’000s
Linda Z. Cook
0%
0
0
0
Alexander Krane
0%
0
0
0
LTIP awards granted during the year ended 31 December 2024 (audited)
For the awards granted to executive directors under the 2017 LTIP during 2024, the performance condition is based 100 per cent on
relative TSR performance conditions against two peer groups. The structure has been summarised below:
Performance element
Weighting
Minimum
performance
Mid
performance
Maximum
performance
Performance
period
Relative TSR performance
vs FTSE 100 index
1
50%
25% vesting at
median performance
(50
th
percentile)
Linear vesting
between minimum and
maximum performance
100% vesting if in the
upper quartile
(75
th
percentile)
1 January 2024 –
31 December 2026
Relative TSR vs bespoke peer
group of oil and gas companies
2
50%
Notes:
1
Constituents of the FTSE 100 as at the start of the performance period on 1 January 2024.
2
Selected oil and gas peer group, including European and US independent oil and gas companies. This group consists of the following 17 companies: Aker BP, Apache Corp,
Capricorn Energy, Diversified Energy, Energean, EnQuest, Genel Energy, Hess, Ithaca Energy, Kosmos Energy, Marathon Oil, Murphy Oil, Seplat Energy, Serica Energy, Tullow Oil,
Vår Energi and Vermillion Energy. The group was updated in 2024, with bp and Shell removed and Ithaca Energy and Vår Energi added.
107
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
As detailed in the 2023 Directors’ remuneration report, Alexander Krane’s LTIP opportunity for 2024 was increased to 300 per cent, in
recognition of the increased scope of his role in relation to M&A activities and execution of the company’s strategy. Details of the awards
made to executive directors are therefore as follows:
Executive directors
Date of grant
Number of
shares awarded
Type of
award
Face value
(% of salary)
Face
value
1
Linda Z. Cook
08.04.24
939,947
Performance share award
300%
£2,664,750
Alexander Krane
08.04.24
618,222
Performance share award
300%
£1,752,660
Note:
1
Face value was calculated using the average of the mid-market closing prices for the five dealing days preceding the award date being £2.835 per share.
Outstanding share awards
2017 Long Term Incentive Plan (2017 LTIP)
As at 31 December 2024, Linda Z. Cook and Alexander Krane held the following outstanding performance share awards (PSAs) and conditional
share awards (CSAs) under the 2017 LTIP:
Directors
Type of
award
1
Date of
grant
Awards held
at 1 January
2024
Granted
Dividend
equivalents
accrued
Lapsed
Vested
Awards held at
31 December
2024
Market price
of shares on
date of
award
3
Earliest
vesting
date
Linda Z. Cook
CSA 2021-24
2
04.05.21
433,916
14,490
448,406
393.53p
04.05.24
PSA 2021-24
30.06.21
759,192
0
759,192
378.28p
30.06.24
PSA 2022-25
24.03.22
652,106
47,502
699,608
440.40p
24.03.25
PSA 2023-26
03.04.23
1,022,388
74,475
1,096,863
269.00p
03.04.26
PSA 2024-27
08.04.24
939,947
68,469
1,008,416
283.50p
08.04.27
2,867,602
939,947
204,936
759,192
448,406
2,804,887
Alexander Krane
CSA 2021-24
30.06.21
297,723
0
297,723
378.28p
01.04.24
PSA 2021-24
30.06.21
390,760
0
390,760
378.28p
30.06.24
PSA 2022-25
24.03.22
335,642
24,449
360,091
440.40p
24.03.25
PSA 2023-26
03.04.23
547,277
39,865
587,142
269.00p
03.04.26
PSA 2024-27
08.04.24
618,222
45,033
663,255
283.50p
08.04.27
1,571,402
618,222
109,347
390,760
297,723
1,610,488
Notes:
1
Any vested awards (except for Linda Z. Cook’s 2021 conditional share award) are subject to a two-year holding period such that the total time horizon is five years.
2
Linda Z. Cook received a buyout award to compensate for loss of performance-based incentives from her previous employer. This award was made on a like-for-like basis and vested
one-third per year on the first, second and third anniversary of the award. The first tranche of the award vested on 4 May 2022, the second tranche vested on 4 May 2023 and the third
tranche vested on 4 May 2024. Further details of the award can be found in the 2021 Directors’ remuneration report.
3
The average of the closing prices of a Harbour Energy share over the five dealing days immediately preceding the award date (on a post-consolidation basis).
Deferred bonus awards
As of 31 December 2024, the following deferred bonus awards were held in respect of the deferred element of the annual bonus award.
Directors
Date of
grant
Awards held at
1 January 2024
Granted
Dividend
equivalents
accrued
Lapsed
Vested
Awards held at
31 December
2024
Market price
of shares on
date of award
1
Earliest vesting
date
Linda Z. Cook
24.03.22
54,043
3,937
57,980
440.40p
24.03.25
03.04.23
255,596
18,618
274,214
269.00p
03.04.26
08.04.24
143,915
10,484
154,399
283.50p
08.04.27
309,639
143,915
33,039
486,593
Alexander Krane
24.03.22
32,651
2,378
35,029
440.40p
24.03.25
03.04.23
157,868
11,500
169,368
269.00p
03.04.26
08.04.24
91,555
6,669
98,224
283.50p
08.04.27
190,519
91,555
20,547
302,621
Note:
1
The average of the closing prices of a Harbour Energy share over the five dealing days immediately preceding the award date (on a post-consolidation basis).
Annual Report on Remuneration
continued
108
Harbour Energy plc
Annual Report & Accounts 2024
Statement of directors’ shareholdings and scheme interests (audited)
The table below summarises the directors’ interests in shares, including unvested awards under employee share schemes, as at 31 December
2024. The total share interests as at 5 March 2025 were the same as shown below for all directors in service as at 31 December 2024.
Further details of all outstanding awards are provided on page 108.
Directors
Own shares at
31 December 2024
1
Unvested shares subject
to continued employment
31 December 2024
2
Unvested shares subject
to performance at
31 December 2024
Linda Z. Cook
8,875,490
486,593
2,804,887
Alexander Krane
155,150
302,621
1,610,488
R. Blair Thomas
8,233,310
Simon Henry
40,000
Belgacem Chariag
0
Dirk Elvermann
0
Hans-Ulrich Engel
0
Alan Ferguson
24,203
Andy Hopwood
10,000
Louise Hough
6,800
Margareth Øvrum
8,500
Anne L. Stevens
30,000
Notes:
1
Own shares includes shares held by the director and/or connected persons. For R. Blair Thomas this figure includes indirect interests he holds in shares in the company through certain
entities managed by EIG, one of the company’s major shareholders. R. Blair Thomas is also Chief Executive Officer of EIG and a director of a number of EIG’s wholly owned subsidiaries.
Details regarding EIG’s shareholding are set out on page 116.
2
Unvested shares subject to continued employment comprise deferred bonus awards. The deferred bonus awards are subject to malus and clawback in accordance with the terms set out
in the Directors’ Remuneration Policy.
Awards under all the company’s share schemes may be met using a combination of market purchases, financed by the company through
the Harbour Energy plc Employee Benefit Trust, and newly issued shares. The company complies with the Investment Association’s
recommended guidelines on shareholder dilution through employee share schemes: the total of all awards satisfied with newly issued
shares under all plans must not exceed 10 per cent of the company’s issued share capital in any rolling 10-year period.
Directors’ shareholding requirements
The company requires the executive directors to retain no less than 50 per cent of the net value of shares vesting under the company’s long-term
incentive plans until such a time that they have reached a holding worth 300 per cent of salary (CEO) and 250 per cent of salary (CFO).
Shares owned outright including shares purchased and received from incentive arrangements, shares subject to deferral or a holding
period (which are not beneficially owned by the senior executive) net of any relevant tax and social security that would be due, vested but
unexercised nil cost options under any share plan, unvested share plan awards where vesting is not subject to the achievement of any
performance conditions or underpins net of any relevant tax and social security and free shares under any UK share incentive plan count
towards this requirement.
Based on an average share price of £2.61 during the final three months of 2024, Linda Z. Cook currently holds shares and deferred bonus
awards worth 2,448 per cent of her salary. Alexander Krane holds shares and deferred bonus awards worth 134 per cent of his salary using
the same average price. Alexander is working towards the guideline of 250 per cent of salary and will continue to be subject to 50 per cent
deferral of his annual bonus until his minimum shareholding is met.
Under the company’s Remuneration Policy, the shareholding requirement extends for two years post-cessation of employment.
Shares purchased by the departed executive directors are not covered by the post-cessation requirement.
Executive director external appointments
Executive directors are permitted to accept non-executive appointments outside the company providing that the Board’s approval is obtained.
Details of external appointments are set out on pages 74 to 77.
109
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Comparison of company performance
The chart below compares the value of £100 invested in the company’s shares, including reinvested dividends, on 31 December 2014
compared to the equivalent investment in the FTSE 100 index over the last 10 financial years. The FTSE 100 index has been chosen as the
comparator for this graph because it is used as a peer group against which relative TSR performance is measured for awards granted under
the 2017 LTIP.
10-year TSR performance
Value of £100 invested on 31 December 2014:
£0
£50
£100
£150
£200
£250
31 Dec 2024
31 Dec 2023
31 Dec 2022
31 Dec 2021
31 Dec 2020
31 Dec 2019
31 Dec 2018
31 Dec 2017
31 Dec 2016
31 Dec 2015
31 Dec 2014
FTSE 100 index
Harbour Energy plc
£9.16
£221.85
Note:
The closing share price of the company on 31 December 2024 was 255.4p. On 5 March 2025, being the date of approval of this report, the closing share price was 214.0p.
The table below shows the CEO single figure of remuneration for the past 10 years and corresponding performance under the annual
and long-term incentives, as a percentage of maximum.
Year
CEO
CEO single figure
of remuneration
£’000s
Annual bonus
payout as %
of maximum
Equity pool
as % of
maximum
1
Restricted share
award vesting as
% of maximum
2
Performance
share award
vesting as %
of maximum
Matching share
award vesting as
% of maximum
2015
Tony Durrant
1,040.4
10
2016
Tony Durrant
1,404.3
66.5
2017
Tony Durrant
1,474.3
63.4
2018
Tony Durrant
1,558.4
54.3
45.1
75.1
2019
Tony Durrant
1,631.1
65
100
38
2020
3
Tony Durrant
814.1
10.4
2021
4
Richard Rose
436.6
Linda Z. Cook
5
5,978.3
33
2022
Linda Z. Cook
3,124.5
75
2023
Linda Z. Cook
2,407.0
48
2024
Linda Z. Cook
3,041.1
29.5
Notes:
1
The maximum opportunity for the 2016 equity pool was 50 per cent of salary.
2
The maximum opportunity for the restricted share award was 20 per cent of salary.
3
Tony Durrant stepped down from the Board on 16 December 2020.
4
Figures shown for 2021 for Richard Rose relate to the period during 2021 that he served as interim Chief Executive Officer: 1 January 2021 to 31 March 2021; and for Linda Z. Cook
relate to the period during 2021 that she served as Chief Executive Officer: 1 April 2021 to 31 December 2021.
5
Linda Z. Cook’s single figure of remuneration in 2021 includes the value of her buyout award which was granted to compensate for the loss of incentive arrangements she had as part
of her previous employment at EIG.
Annual Report on Remuneration
continued
110
Harbour Energy plc
Annual Report & Accounts 2024
Percentage change in directors’ remuneration compared with other employees
The table below shows the percentage change in each director’s remuneration, comprising salary/fees, benefits and annual bonus,
and comparable data for the average of all UK-based employees within the company, over each of the five years from 2020 to 2024.
Figures are presented on an annualised basis to allow for comparison.
Salary/fees
Benefits
Annual bonus
1
2024
2023
2022
2021
2020
2024
2023
2022
2021
2020
2024
2023
2022
2021
2020
Executive directors
Linda Z. Cook
2
6%
0%
0%
132%
(26)%
103%
(35)%
(36)%
126%
Alexander Krane
8%
3%
0%
(19)%
23%
4%
(33)%
(34)%
118%
Non-executive directors
3
R. Blair Thomas
12%
0%
Simon Henry
9%
0%
Belgacem Chariag
5
64%
Dirk Elvermann
Hans-Ulrich Engel
Alan Ferguson
10%
0%
Andy Hopwood
4
9%
4.0%
0.76%
Louise Hough
5
63%
Margareth Øvrum
10%
0%
Anne L. Stevens
10%
0%
All employees
7.20%
7.48%
2.91%
3.69%
2.51%
8.95%
7.11%
11.85%
26.09%
(3.54)% (19.55)% (30.07)% 115.82%
98.20% (69.43)%
Notes:
1
Includes cash bonus and amount deferred into shares.
2
The benefits figure for Linda Z. Cook for 2022, 2023 and 2024 reflects increased tax equalisation payments provided in connection with the vesting of the first,
second and third tranche of the conditional share award during those years. This award has now vested in full.
3
The increase for the non-executive directors reflects the increase in their fees which were reviewed following completion of the Wintershall Dea transaction.
4
The increase for Andy Hopwood in 2022 and 2023 reflects a change in his committee membership and therefore an increase in the scope and complexity of his role.
5
The significant increase for Belgacem Chariag and Louise Hough is due to their part-year appointments in 2023, resulting in pro-rated salaries for that year.
CEO pay ratio
The table below sets out the ratio of the CEO’s pay to the lower quartile, median and upper quartile pay of the company’s UK employees
for the past six years.
Year
Method
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
2024
Method A
27.11 : 1
22.86: 1
16.63 : 1
Total pay and benefits
£112,162.88
£133,046.82
£182,896.82
Salary
£66,988.11
£80,511.60
£110,040.00
2023
Method A
22.03 : 1
18.16 : 1
13.40 : 1
2022
Method A
28.35 : 1
23.68 : 1
17.10 : 1
2021
Method A
76.6 : 1
62.3 : 1
40.99 : 1
2020
Method A
10.8 : 1
7.5 : 1
5.1 : 1
2019
Method A
19.8 : 1
11.9 : 1
8.2 : 1
The 2024 median pay ratio of 22:86 reflects the fact that the CEO single figure of remuneration has increased in comparison to 2023,
due to increased taxable benefits received during the year. Fluctuations in pay ratios in previous years were due to variations in incentive
outcomes year-on-year. The 2020 and 2019 figures represent the data for Premier Oil plc prior to the merger.
Total pay and benefits for all employees has remained in line with 2023. The median pay ratio is consistent with the pay, reward and
progression policies for the company’s UK employees as a whole, with pay grades benchmarked to the oil and gas industry and a graduated
bonus scheme based on these grades. The results are consistent with the professional nature of our workforce.
The Committee believes that, of the methodologies permitted under the regulations, Method A provides the most statistically accurate
representation of the Chief Executive Officer’s remuneration relative to the UK workforce. Total pay and benefits (on a full-time equivalent
basis) for the employees at 31 December 2024 have been calculated in line with the ‘single figure methodology’ used for the Chief
Executive Officer. Employees were then ranked to identify each individual at the 25
th
, 50
th
and 75
th
percentiles.
111
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REMUNERATION REPORT
CONTINUED
Relative importance of spend on pay
The table below shows the company’s actual expenditure on shareholder distributions and total employee pay expenditure for the financial years
ending 31 December 2023 and 31 December 2024. Total shareholder distribution expenditure is composed of dividends and share buybacks.
2024
$ million
2023
$ million
%
change
Remuneration paid to or receivable by all employees of the Group
509
379
34%
Distributions to shareholders by way of dividend
199
190
5%
Distributions to shareholders by way of share buyback
0
248
1
(100%)
Note:
1
Part of the share buyback programme announced on 3 November 2022 was implemented during 2023 and concluded on 15 February 2023. On 9 March 2023 the company announced
a further $200 million share buyback programme which concluded on 28 September 2023. The 2023 figure reflects the cost of the shares during 2023 and excludes associated fees
of $1 million.
Implementation of executive director Remuneration Policy for 2025
This section sets out the proposed implementation of the Directors’ Remuneration Policy in 2025.
Salary
The Committee reviewed the salaries for the executive directors in 2024. The review focused on the increased size and scope of their roles
following completion of the Wintershall Dea transaction, including the geographic expansion of the company, the diversification of the asset
base, the significant increase in production levels and the increase to the company’s market capitalisation. It was agreed that the CEO’s
salary should be set at £975,000 and the CFO’s salary at £625,000. These increases took effect on 4 September 2024, the first day
following completion of the Wintershall Dea transaction, to align with increases awarded to other senior staff. Salaries for executive directors
will next be reviewed in April 2026.
The base salaries of the executive directors are shown below:
Directors
Position
Salary from
1 April 2024
£
Salary from
4 September 2024
£
Percentage
increase
%
Salary from
1 April 2025
£
Percentage
increase
%
Linda Z. Cook
Chief Executive Officer
888,250
975,000
9.8%
975,000
0%
Alexander Krane
Chief Financial Officer
584,220
625,000
7.0%
625,000
0%
Pension and benefits
Pension levels for executive directors will remain at 20 per cent of salary, which is the level available to the wider workforce. There are no
other changes intended to the benefits provided to executive directors. Their housing allowances will continue to apply for the remainder
of the time they remain in role.
Annual bonus
As described on page 89, the Committee reviewed annual bonus opportunity levels as part of the Directors’ Remuneration Policy review
and determined to increase the maximum opportunity for the CEO to 250 per cent of salary (previously 200 per cent of salary), to reflect
the increased size and scope of her role following completion of the Wintershall Dea transaction. The CFO’s opportunity will remain at
200 per cent of salary for 2025.
The executive director annual bonus corporate scorecard, setting out measures for 2025, is summarised below. There have been two
changes to the scorecard for 2025, which is a reduction in the safety & environment component from 35 per cent to 30 per cent of the total
award, and an increase in the financial component from 15 per cent to 20 per cent of the award. This is to reflect an increased focus on
cash flow performance. Individual performance targets are considered to be commercially sensitive and will be disclosed in next year’s
Annual Report & Accounts.
Category
Targets
Weighting
(% of maximum corporate
bonus opportunity)
1. Safety & environment
Safety incident rate, Process safety, GHG emissions
30%
2. Operations
Oil and gas production, Unit operating costs
30%
3. Growth & capital deployment
Expenditure vs AFE, Reserves vs AFE
20%
4. Financial
Free cash flow
20%
Annual Report on Remuneration
continued
112
Harbour Energy plc
Annual Report & Accounts 2024
Long Term Incentive Plan
As set out on page 91, the company is seeking shareholder approval at the AGM for a new Policy, which includes a ‘hybrid’ structure of
performance shares and restricted shares. This would replace the current long term incentive which consists solely of performance shares.
The Committee intends to grant performance share awards to the CEO and CFO of a value equal to 300 and 240 per cent of salary respectively,
in line with the new Policy. The performance conditions will be aligned with previous years and be assessed against relative TSR, with 50 per
cent of the award being assessed against the FTSE 100 index and 50 per cent against a bespoke oil and gas peer group. In late 2024 the
Committee reviewed the constituents of the bespoke peer group in the context of changes to the business following the Wintershall Dea
transaction, resulting in several changes. Marathon Oil delisted following its acquisition by Conoco and Hess was removed due to its announced
acquisition by Chevron. Two further companies, Genel Energy and Capricorn Energy, were also removed given their much smaller size compared
to other members of the group, and the location of their operations being less relevant to Harbour. Four new companies were added, considered
by the Committee to be relevant in terms of size and geographic spread: Woodside Energy and Santos Energy, two Australian-listed
independents with international footprints; Talos Energy, a US-listed independent with large operations in the US Gulf of Mexico and assets in
Mexico; and Bluenord, a Norwegian-listed independent primarily focused in the Danish North Sea. The structure of this element will be threshold
vesting (25 per cent of maximum) for performance in line with the median and maximum vesting for performance in line with the upper quartile.
The Committee also intends to grant restricted share awards to the CEO and CFO of a value equal to 100 and 80 per cent of salary
respectively. These are not subject to performance conditions, but rather, will be assessed at the end of the three-year vesting period based
on achievement of an underpin. The underpin provides the Committee with the discretion to reduce the vesting level of restricted share
awards based on its assessment of financial and non-financial performance over the vesting period.
Awards to executive directors will be granted as soon as practicable after the 2025 AGM. The grant price, used to determine the number
of shares for their awards, will be the five-day average closing price from 31 March 2025 to 4 April 2025, in line with the awards made to
other eligible employees.
One-off awards
Subject to approval of the Policy by shareholders at the 2025 AGM, the one-off awards to the CEO and CFO will be made in 2025.
The award to the CEO will be paid in cash and the award to the CFO will be granted in shares, vesting in April 2026. Awards are not subject
to any performance conditions though malus and clawback apply. Details of the awards are on page 92.
Non-executive director remuneration
The fee structures for the Chair and non-executive directors are reviewed annually to ensure that they remain appropriate to reflect time
commitment, demands and responsibilities for the role. The Board reviewed fee levels in 2024 and given the material changes to the
business as a result of the Wintershall Dea transaction, it was considered that a larger level of increase was appropriate to reflect the
increased complexity of the non-executive director roles. Following that review, the Remuneration Committee approved a 25 per cent
increase to the base fee for the Chair. The Board approved the same increase to the base fee for non-executive directors and the
supplementary fees for the Senior Independent Director and Board Committee Chair roles. The remuneration arrangements for the Chair
and non-executive directors were adjusted with effect from 4 September 2024 (the first day following completion of the Wintershall Dea
transaction) as per the table below. No further increases are planned for 2025.
Basic fees
Salary from
1 April 2024
Salary from
4 September 2024
Chair all-inclusive fee
313,500
391,875
Other non-executive directors’ basic fee
88,825
111,000
Supplementary fees
Senior Independent Director
30,000
37,500
Chair of Audit and Risk Committee
20,000
25,000
Chair of Remuneration Committee
Chair of Health, Safety, Environment and Security Committee
15,000
18,750
Chair of Nomination Committee (N.B. waived by R. Blair Thomas)
Member of Audit and Risk Committee
15,000
15,000
Member of Remuneration Committee
Member of Health, Safety, Environment and Security Committee
10,000
10,000
Member of Nomination Committee
For and on behalf of the Remuneration Committee:
Anne L. Stevens
Committee Chair
5 March 2025
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GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REPORT
The directors present their Annual Report on the affairs of the Group,
together with the audited Group and parent company financial
statements and Auditor’s report for the year ended 31 December
2024. There are certain disclosure requirements which form part
of the directors’ report and are included elsewhere in this Annual
Report. The location of information incorporated by reference into
this directors’ report is set out on page 116.
Dividend
The Board is proposing a final dividend of 13.19 cents per ordinary
share (2023: 13 cents) to be paid in pound sterling at the spot rate
prevailing on the record date. This dividend is subject to shareholder
approval at the AGM, to be held on 8 May 2025. If approved,
the dividend will be paid on 21 May 2025 to shareholders on
the register as of 11 April 2025 (the record date).
Annual General Meeting
The company anticipates that the next AGM will be held on 8 May
2025. The notice of the AGM (the Notice), together with details of all
resolutions which will be placed before the meeting, will be published
in due course and will be available in the shareholder information
section of the website.
Directors
The directors of the company as at 5 March 2025 are shown
on pages 74 to 77. Changes to the directors during the year and
up to the date of this report are set out below:
Appointments
Role
Effective date
of appointment
Dirk Elvermann
Non-Executive Director
3 September 2024
Hans-Ulrich Engel
Non-Executive Director
3 September 2024
Meeting attendance
Seven Board meetings were held during the year covering a full
agenda of strategic, performance and governance items.
Director
Meetings attended
Percentage
R. Blair Thomas
7/7
100%
Linda Z. Cook
7/7
100%
Alexander Krane
7/7
100%
Simon Henry
7/7
100%
Alan Ferguson
7/7
100%
Andy Hopwood
7/7
100%
Margareth Øvrum
7/7
100%
Anne L. Stevens
7/7
100%
Belgacem Chariag
1
6/7
86%
Louise Hough
7/7
100%
Dirk Elvermann
2
2/2
100%
Hans-Ulrich Engel
3
2/2
100%
1
Belgacem Chariag was unable to attend one meeting due to extenuating circumstances.
He received meeting materials and had the opportunity to provide input to the Chair in
advance of the meeting.
2
Dirk Elvermann joined the Board on 3 September 2024.
3
Hans-Ulrich Engel joined the Board on 3 September 2024.
Articles of association
The company’s articles of association were adopted at the 2021
Annual General Meeting (AGM) and may only be amended by a
special resolution of the shareholders. The company’s articles of
association contain provisions regarding the appointment, retirement
and removal of directors and how the directors can use all of the
company’s powers. A copy of the articles of association can be found
on our website: harbourenergy.com.
Indemnification of directors and insurance
During the financial year, the company had in place an indemnity to each
of its directors and the Company Secretary under which the company
will, to the fullest extent permitted by law and to the extent provided by
the articles of association, indemnify them against all costs, charges,
losses and liabilities incurred by them in the execution of their duties.
The indemnity was in force for all directors who served during the year.
The company also has directors’ and officers’ liability insurance in place.
Share capital
Details of the company’s issued share capital, together with details of
any movement in the issued share capital during the year, are shown
in note 25 to the consolidated financial statements on page 181. The
company has a class of ordinary shares which carries no right to fixed
income and a non-voting share class where holders receive a 13 per
cent premium on dividends declared. Each ordinary share carries the
right to one vote at shareholder meetings of the company.
The company was authorised at the 2024 AGM to allot (i) relevant
securities for a nominal amount of up to £5,135 and (ii) equity
securities up to a nominal amount of £10,271 less the nominal
amount of any shares issued under part (i) of the authority.
In connection with the all-employee Save As You Earn scheme,
24,655 shares were allotted under the first authority during
the year at an option price of £2.208 per share.
Employee share schemes
Details of employee share schemes are set out in note 27 to the
consolidated financial statements on pages 182 and 183. Voting
rights in relation to the shares held within the Employee Benefit
Trust are exercisable by the trustee but it has no obligation to do so.
The trust is entitled to receive a dividend but waives the right.
Details of the number of shares held by the Employee Benefit Trust
are set out in note 25 to the financial statements on page 180.
Equal opportunities
Full and fair consideration is given to all applications for employment
by disabled persons, having regard for any particular aptitudes and
abilities. We strive to provide continued employment and arrange
appropriate training for members of our workforce who become disabled
whilst employed by us. We provide training, career development and
promotion of disabled employees. Our commitment to building a diverse,
equitable and inclusive environment is foundational to our values and is
underpinned by our people and diversity, equity and inclusion policies.
American Depositary Receipt programme
Harbour Energy plc has a sponsored Level 1 American Depositary
Receipt (ADR) programme which BNY Mellon administers and for
which it acts as Depositary. Each ADR represents one ordinary share
of the company. The ADRs trade on the US over-the-counter market
under the symbol HBRIY.
Hedging and risk management
Details of the Group’s hedging and risk management are provided
in the Financial review on page 35. A further disclosure has been
made in notes 23 and 24 to the consolidated financial statements
on pages 173 and 175, related to various financial instruments and
exposure of the Group to price, credit, liquidity and cash flow risk.
Branches
As a global group our interests and activities are held or operated through
subsidiaries, branches, joint arrangements or associates established
in and subject to the laws and regulations of different jurisdictions.
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Relationship agreements
The company has relationship agreements in place with BASF
Handels-und Exportgesellschaft Mit Beschränkter Haftung (BASF)
and L1 Energy Capital Management Services S. À R. L. (LetterOne)
which were entered into upon completion of the Wintershall Dea
acquisition in September 2024. As BASF is a controlling
shareholder for the purposes of the UK Listing Rules, in
accordance with UKLR 6.6.1R(13), the directors confirm that
the company continues to be able to carry on the business
it carries on as its main activity independently from BASF
at all times in accordance with UKLR 6.2.3R.
BASF
BASF currently holds 46.50 per cent of the company’s ordinary
shares. Participation in this agreement will continue in force
unless and until BASF and its associates cease to own at least
10 per cent of the ordinary shares. The relationship agreement
terminates in certain circumstances, including where the ordinary
shares cease to be admitted to trading on the London Stock
Exchange’s main market for listed securities.
Under the relationship agreement, BASF is entitled to nominate two
non-executive directors for appointment to the Board for so long as
it (together with any of its associates) holds 25 per cent or more of
the ordinary shares. BASF will be able to appoint one non-executive
director to the Board for so long as it (together with any of its
associates) holds 10 per cent or more, but less than 25 per cent
of the ordinary shares. At the current time, Dirk Elvermann and
Hans-Ulrich Engel are BASF’s nominated appointees.
The BASF relationship agreement provides that all transactions,
arrangements and relationships between the company or any
other member of the Group and BASF or any of its associates shall
be conducted at arm’s length and on normal commercial terms.
In addition, pursuant to the relationship agreement, BASF
undertakes that it shall not:
take any action that would have the effect of preventing the
company from complying with its obligations under the UK
Listing Rules;
propose or procure the proposal of a shareholder resolution
of the company which is intended or appears to be intended
to circumvent the proper application of the UK Listing Rules;
exercise any of its voting rights in the company in a way that
would be inconsistent with, or breach any of the provisions of,
the BASF relationship agreement;
influence the day-to-day running of the company at an
operational level and shall allow the company to operate
on an independent basis; or
act in a manner which would be inconsistent with the
independence of the Board being maintained in accordance
with the rules of the London Stock Exchange or the FCA
applicable to the company, including the UK Listing Rules.
LetterOne
LetterOne owns 14.9 per cent of the company’s total issued share
capital currently in the form of non-voting, non-listed convertible
ordinary shares with preferential rights.
Participation in this agreement will continue in force unless and
until LetterOne and its associates cease to own ordinary shares
or non-voting shares representing (in the case of non-voting
shares assuming conversion at the applicable conversion rate)
in aggregate, at least 10 per cent of the ordinary shares. The
relationship agreement terminates in certain circumstances,
including where the ordinary shares cease to be admitted to trading
on the London Stock Exchange’s main market for listed securities.
The LetterOne relationship agreement provides that from the
date on which LetterOne (together with its associates) holds
10 per cent or more of the ordinary shares, all transactions,
arrangements and relationships between the company or any
other member of the Group on the one hand, and LetterOne or any
of its associates on the other hand, shall be conducted at arm’s
length and on normal commercial terms. In addition, pursuant to
the relationship agreement, LetterOne undertakes that it shall not:
take any action that would have the effect of preventing the
company from complying with its obligations under the UK
Listing Rules;
propose or procure the proposal of a shareholder resolution
of the company which is intended or appears to be intended
to circumvent the proper application of the UK Listing Rules;
exercise any of its voting rights in the company in a way that
would be inconsistent with, or breach any of the provisions of,
the LetterOne relationship agreement;
influence the day-to-day running of the company at an
operational level and shall allow the company to operate
on an independent basis; or
act in a manner which would be inconsistent with the
independence of the Board being maintained in accordance
with the rules of the London Stock Exchange or the FCA
applicable to the company, including the UK Listing Rules.
EIG
The company had in place a relationship agreement with
EIG Global Energy Partners (EIG) which was entered into on
completion of the merger in March 2021 (the EIG relationship
agreement) and expired in September 2024, when EIG ceased
to own at least 10 per cent or more of the ordinary shares or
the voting rights attaching to the ordinary shares.
Under the EIG relationship agreement, EIG was entitled to nominate
one non-executive director for appointment to the Board for so long
as it held between 10 per cent and 25 per cent of the issued
shares of the company and two non-executive directors for so long
as it held over 25 per cent of the shares. Up until 3 September
2024, R. Blair Thomas (Chair) was EIG’s nominated appointee.
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ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
DIRECTORS’ REPORT
CONTINUED
Significant agreements
The following significant agreements will, in the event of a change
of control of the company, be affected as follows:
under the $3 billion revolving credit facility agreement between,
among others, the company, certain subsidiaries of the company
and a syndicate of financial institutions, upon a change of control
(save for certain exceptions), each lender has the right to serve
notice, and following a short prescribed period after such notice,
all of that lender’s commitments under the agreement would be
cancelled and all amounts owing to it would become immediately
due and payable;
the Group has outstanding senior unsecured bond notes totalling
€4.6 billion due from 2025 to 2032 and $500 million due in
2026. Upon a change of control (save for certain exceptions)
and a negative rating event, each noteholder will have the right
to require the issuer to repurchase all or any part of that holder’s
notes at 101 per cent of the principal amount, including accrued
interest; and
the Group has outstanding perpetual subordinated notes
totalling €1.5 billion. Upon a change of control (save for certain
exceptions) and a negative rating event, unless the issuer
redeems the notes in whole, the applicable interest rate will
be subject to an increase of 500 basis points.
Political donations
No political donations were made during the year (2023: $nil).
Significant events since 31 December 2024
Details of significant events since the balance sheet date are
contained in note 32 to the financial statements on page 188.
Information set out in the Strategic report
In accordance with s414C(11) of the Companies Act 2006, the
directors have chosen to set out the information outlined below,
required to be included in the directors’ report, in the Strategic report.
the main trends and factors likely to affect the future
development, performance and position of the business:
pages 6 to 11;
information on the company’s research and development
activities: pages 31 and 51;
a summary of the company’s principal risks: pages 64 to 69;
employee engagement and involvement: pages 14 to 17, and
pages 57 and 58;
diversity, equity and inclusion: page 58;
information about greenhouse gas emissions and addressing
our environmental impact: pages 44 to 53; and
engagement with suppliers, customers and other stakeholders:
pages 14 to 17 and pages 54 to 58.
The Strategic report and the directors’ report together include
the ‘management report’ for the purposes of the FCA’s Disclosure
Guidance and Transparency Rules (DTR 4.1.8R).
Information set out elsewhere in this Annual Report
Information regarding the company’s governance arrangements
is included in the corporate governance report and related Board
committee reports on pages 70 to 113. These sections of the report
are incorporated into this report by reference.
For the purposes of UK Listing Rule 6.6.4R, the information required
to be disclosed by UK Listing Rule 6.6.1R can be found in the
following locations:
Listing rule
sub-section Item
Location
6.6.1R (1)
Interest capitalised
Note 7 to the financial statements:
page 154
6.6.1R (3)
Details of long-term
incentive schemes
Directors’ remuneration report:
pages 107, 108 and 113
6.6.1R (4)
Waivers of emoluments
by a director
Directors’ remuneration report:
page 105
Non-financial reporting
In order to consolidate our reporting requirements under sections
414CA and 414CB of the Companies Act 2006 in respect of
non-financial reporting, the table on page 59 shows where in this
Annual Report to find each of the disclosure requirements.
Audit information
Each of the persons who is a director at the date of approval
of this Annual Report and financial statements confirms that:
so far as the director is aware, there is no relevant audit
information of which the company’s auditors are unaware; and
the director has taken all reasonable steps that he/she ought
to have taken as a director in order to make himself/herself
aware of any relevant audit information and to establish that
the company’s auditors are aware of that information.
This confirmation is given and should be interpreted in accordance
with the provisions of s418 of the Companies Act 2006. By order
of the Board:
Rachel Rickard
Company Secretary
5 March 2025
Significant shareholdings of ordinary shares
As at 5 March 2025, the company had received notification from the institutions below, in accordance with chapter 5 of the Disclosure
Guidance and Transparency Rules, of their significant holdings of voting rights (three per cent or more) in its ordinary shares:
Name of shareholder
Date of notification to
the stock exchange
Notified number
of voting rights
1
Notified percentage
of voting rights
Nature of holding
BASF SE
5 September 2024
669,714,027
46.50
Direct
EIG Asset Management, LLC
4 October 2024
125,983,303
8.75
Direct
Control Empresarial de Capitales
16 September 2024
72,028,338
5.00
Direct
1
Notified number of voting rights in issue at the time of the announcement to the market.
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable United
Kingdom law and regulations.
Group financial statements
Company law requires the directors to prepare financial statements
for each financial year. Under that law the directors have elected
to prepare the Group financial statements in accordance with
UK-adopted International Accounting Standards (IAS) in conformity
with the requirements of the Companies Act 2006, and the parent
company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting
Standards and applicable law), including Financial Reporting
Standard 101 Reduced Disclosure Framework (FRS 101). Under
company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the
state of affairs of the Group and the company and of the profit or
loss of the Group and the company for that period.
In preparing the Group and parent company financial statements
the directors are required to:
select suitable accounting policies in accordance with IAS 8
Accounting Policies, Changes in Accounting Estimates and
Errors and then apply them consistently;
make judgements and accounting estimates that are reasonable
and prudent;
present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
provide additional disclosures when compliance with the specific
requirements in IFRSs and, in respect of the parent company
financial statements, FRS 101 is insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the Group and company financial position and
financial performance;
in respect of the Group financial statements, state whether UK-
adopted International Accounting Standards have been followed,
subject to any material departures disclosed and explained in
the financial statements;
in respect of the parent company financial statements, state
whether International Accounting Standards in conformity with
the requirements of the Companies Act 2006/applicable UK
Accounting Standards, including FRS 101, have been followed,
subject to any material departures disclosed and explained in
the financial statements; and
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company and/or
the Group will continue in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s and
Group’s transactions and disclose with reasonable accuracy at
any time the financial position of the company and the Group and
enable them to ensure that the company and the Group financial
statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and parent
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a strategic report, directors’ report,
directors’ remuneration report and corporate governance statement
that comply with that law and those regulations. The directors are
responsible for the maintenance and integrity of the corporate and
financial information included on the company’s website:
harbourenergy.com.
Directors’ responsibility statement (DTR 4.1)
The directors, whose names and functions are set out on pages 74
to 77, confirm, to the best of their knowledge:
that the consolidated financial statements, prepared in
accordance with UK-adopted International Accounting Standards,
give a true and fair view of the assets, liabilities, financial position
and profit of the parent company and undertakings included in
the consolidation taken as a whole;
that the Annual Report & Accounts, including the Strategic report,
includes a fair review of the development and performance of
the business and the position of the company and undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks that they face; and
that they consider the Annual Report & Accounts, taken as a
whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the company’s
position, performance, business model and strategy.
This responsibility statement was approved by the board of directors
on 5 March 2025 and is signed on its behalf by:
Linda Z. Cook
Chief Executive Officer
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ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Opinion
In our opinion:
Harbour Energy plc’s Group financial statements and parent company financial statements (the financial statements) give a true and
fair view of the state of the Group’s and of the parent company’s affairs as at 31 December 2024 and of the Group’s loss for the year
then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Harbour Energy plc (the parent company) and its subsidiaries (the Group) for the year ended
31 December 2024 which comprise:
Group
Parent company
Consolidated balance sheet as at 31 December 2024
Company balance sheet as at 31 December 2024
Consolidated income statement for the year then ended
Company statement of changes in equity for the year then ended
Consolidated statement of comprehensive income for the year
then ended
Related notes 1 to 10 to the financial statements including material
accounting policy information
Consolidated statement of changes in equity for the year then ended
Consolidated statement of cash flows for the year then ended
Related notes 1 to 33 to the financial statements, including material
accounting policy information
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK
adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the parent
company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 ‘Reduced Disclosure
Framework’ (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and parent in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent company and we remain
independent of the Group and the parent company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and parent company’s ability to continue
to adopt the going concern basis of accounting included:
confirming our understanding of management’s going concern assessment process in conjunction with our walkthrough of the Group’s
financial close process and engaging with management to confirm all relevant assumptions were considered;
evaluating the appropriateness of the period used for management’s going concern assessment, which is defined as the period
up to 31 December 2026;
obtaining the cash flow forecasts prepared by management for the Group, including the base case and downside scenarios, and testing
the integrity of management’s going concern model including its arithmetical accuracy;
checking the consistency of information used in management’s going concern model with the budget approved by the Board and with
other areas of the audit such as impairment assessments;
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
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challenging the key assumptions included in the model, including management’s oil and gas price assumptions. Our assessment
of these price assumptions included a comparison of management’s price assumptions with recent broker and consultant estimates
together with estimates used by other market participants, including those estimates that reflect the potential impact of the climate
change transition risks;
evaluating the reasonableness of all other key assumptions, such as production profiles and operating and capital expenditure
forecasts, through assessing their consistency with other areas of the audit, including management’s impairment assessments.
We also ensured these assumptions were consistent with the Group’s 2025 budget and the long range plan approved by the Board;
inspecting the Group’s loan agreements, ensuring that the cash outflows relating to interest and repayments are consistent with
the agreements, concluding that no covenants have been breached and evaluating whether there is any forecast covenant breach
in either the base case or severe but plausible downside case scenarios during the going concern period;
verifying that the cash flow forecasts include estimated outflows in respect of the Energy Profits Levy (EPL) and ensuring such outflows
were consistent with our work on management’s impairment assessments;
reviewing management’s reverse stress tests in order to identify what factors would lead to the Group not meeting the financial
covenants during the going concern period, including the extinguishment of liquidity, and assessing the likelihood of occurrence
of such a scenario; and
evaluating the appropriateness of the going concern disclosures in the financial statements to determine whether they are accurate
and in line with IAS 1 – Presentation of Financial Statements and our expectations given the procedures we have performed.
Based on the procedures performed, we observed that the oil and gas prices are within the range of recent brokers’ and consultants’
estimates, and production profiles are consistent with those used in management’s impairment assessments and in our work on oil and gas
reserves. In the severe but plausible downside cases modelled by management, we observed that there was no liquidity extinguishment and
that under these cases the Group operates within the requirements of its financial covenants without any mitigating actions being required.
We concluded that the modelled plausible downside scenarios were reasonable for concluding on the going concern assumption. In addition,
we have concluded that the reverse stress scenarios, under which available liquidity is extinguished, have a remote likelihood of occurrence.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group and parent company’s ability to continue as a going concern for a period up to
31 December 2026.
In relation to the Group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered
it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this
report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s ability
to continue as a going concern.
Overview of our audit approach
Audit scope
We performed an audit of the complete financial information of eight components, and audit procedures on specific
balances for a further 17 components
We performed centralised procedures on the following areas: accounting for the purchase price allocation associated
with the Wintershall Dea acquisition, estimation of oil and gas reserves, impairment of tangible oil and gas properties
and associated goodwill, derivatives and borrowings, assets held for sale, equity and consolidation journals
Key audit matters
Accounting for the purchase price allocation associated with the Wintershall Dea acquisition
Oil and gas reserves estimation including reserves used in the calculation of depreciation, depletion
and amortisation, impairment testing and the assessment of recoverability of deferred tax assets
Impairment of tangible oil and gas properties and associated goodwill
Materiality
Overall Group materiality of $170 million which represents 0.6% of Total assets
Specific Group materiality of $86 million which represents 2.2% of Adjusted Earnings Before Interest, Tax,
Depreciation and Amortisation (Adjusted EBITDA)
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An overview of the scope of the parent company and Group audits
Tailoring the scope
In the current year our audit scoping has been updated to reflect the new requirements of ISA (UK) 600 (Revised). We have followed a risk-based
approach when developing our audit approach to obtain sufficient appropriate audit evidence on which to base our audit opinion. We performed
risk assessment procedures, with input from our component auditors, to identify and assess risks of material misstatement of the Group
financial statements and identified significant accounts and disclosures. When identifying components at which audit work needed to be
performed to respond to the identified risks of material misstatement of the Group financial statements, we considered our understanding of the
Group and its business environment, the potential impact of climate change, the applicable financial framework, the Group’s system of internal
control at the entity level, the existence of centralised processes and applications and any relevant internal audit results.
We determined that centralised audit procedures could be performed in the following audit areas: accounting for the purchase price
allocation associated with the Wintershall Dea acquisition, estimation of oil and gas reserves, impairment of tangible oil and gas properties
and associated goodwill, derivatives and borrowings, assets held for sale, equity and consolidation journals.
We then identified: 15 components as individually relevant to the Group due to relevant events and conditions underlying the identified risks
of material misstatement of the Group financial statements being associated with the reporting components, pervasive risks of material
misstatement of the Group financial statements or a significant risk or an area of higher assessed risk of material misstatement of the
Group financial statements being associated with the components; and 13 of the components of the Group as relevant due to materiality
or financial size of the component relative to the Group.
For those individually relevant components, we identified the significant accounts where audit work needed to be performed at these
components by applying professional judgement, having considered the Group significant accounts on which centralised procedures will
be performed, the reasons for identifying the financial reporting component as an individually relevant component and the size of the
component’s account balance relative to the Group significant financial statement account balance.
We then considered whether the remaining Group significant account balances not yet subject to audit procedures, in aggregate, could give
rise to a risk of material misstatement of the Group financial statements. No additional components of the Group were included in our audit
scope to address these risks.
Having identified the components for which work will be performed, we determined the scope to assign to each component.
Of the 28 components selected, we designed and performed audit procedures on the entire financial information of eight components
(full scope components). For 17 components, we designed and performed audit procedures on specific significant financial statement
account balances or disclosures of the financial information of the component (specific scope components). For the remaining three
components, we performed specified audit procedures to obtain evidence for one or more relevant assertions.
Our scoping to address the risk of material misstatement for each key audit matter is set out in the Key audit matters section of our report.
The 28 components where we performed audit procedures accounted for 89% (2023: 86%) of the Group’s Total Assets and 92%
(2023: 94%) of the Group’s Adjusted EBITDA.
Changes from the prior year
Components in Indonesia and Vietnam were no longer designated as full or specific scope for the 2024 audit due to their size compared to
the enlarged Group post-acquisition of Wintershall Dea and their assessed risks, whereas new components in Norway, Argentina, Germany
and Mexico were scoped in to reflect the enlarged Group operations driven by the acquisition of Wintershall Dea. Although the UK operations
continued to be in scope, there were a number of changes related to the designation of the UK components as either full scope or specific scope.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to be undertaken at each of the
components by us, as the UK integrated primary audit team, or by component auditors from other EY global network firms operating under
our instruction.
As a result of the Wintershall Dea acquisition, the Group audit team planned and executed a series of site visits which involved the Senior
Statutory Auditor and/or delegates visiting the key new locations. During the current year’s audit cycle, physical visits were undertaken by the
UK integrated Group primary audit team to the component teams in Norway, Argentina, Germany and Mexico. These visits involved direction,
supervision, oversight of our overseas EY audit teams, review of their respective audit working papers on risk areas and meetings with local
management in each country. The UK integrated Group primary audit team interacted regularly with the component teams where appropriate
during various stages of the audit, reviewed relevant working papers, were responsible for the scope and direction of the audit process
and participated in the audit closing meetings which were held locally. Where relevant, the section on key audit matters details the level
of involvement we had with component auditors to enable us to determine that sufficient audit evidence had been obtained as a basis
for our opinion on the Group as a whole.
This, together with the additional procedures performed at Group level, gave us appropriate evidence for our opinion on the Group
financial statements.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
CONTINUED
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Harbour Energy plc
Annual Report & Accounts 2024
Climate change
Stakeholders are increasingly interested in how climate change will impact Harbour Energy plc. The Group has determined that the most
significant future impacts from climate change on their operations will be from an accelerated shift in consumer demand for oil and gas
products, increasing focus on climate change by investors, building a distinctive and credible position in CCS in light of increasing demand for
new clean technologies in oil and gas, and chronic and acute physical risks. These are explained on pages 48 and 49 in the required Task
Force on Climate-related Financial Disclosures and on page 69 in the principal risks and uncertainties. The Group has also explained its
climate commitments on page 45. All of these disclosures form part of the ‘Other information’, rather than the audited financial statements.
Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our
responsibilities on ‘Other information’.
In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential
material impact on its financial statements.
The Group has explained in note 2 – Accounting Policies, how they have reflected the impact of climate change in their financial statements
including how this aligns with their commitment to achieve net zero across gross operated Scope 1 and 2 emissions by 2050 and their
interim target of a 50% reduction in 2030 against their 2018 baseline. Significant judgements and estimates relating to climate change are
included in note 2 to the financial statements. These disclosures also explain where governmental and societal responses to climate change
risks are still developing, and where the degree of certainty of these changes means that they cannot be taken into account when
determining asset and liability valuations under the requirements of the International Financial Reporting Standards (IFRS). In note 2,
management has provided supplementary sensitivity disclosures showing the impact of oil, gas and carbon costs under IEA scenarios
on the carrying value of tangible oil and gas assets.
Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s
assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed
on pages 45, 48 and 49, and 69 and the significant judgements and estimates disclosed in note 2 and whether these have been
appropriately reflected in (i) oil and gas reserves estimation, (ii) the impairment assessments for tangible oil and gas assets and associated
goodwill and associated sensitivity disclosures, (iii) the valuation of net deferred tax liabilities, and (iv) the timing and nature of
decommissioning liabilities recognised following the requirements of UK-adopted international accounting standards. As part of this
evaluation, we performed our own risk assessment, supported by our climate change internal specialists and senior audit team members
with significant experience in climate change and energy transition. This included meetings with the Group’s Net Zero strategy, Financial
Planning and Group Finance teams and a review of peer disclosures and sector guidance on climate change and energy transition to
determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit.
We also challenged the Directors’ considerations of climate change risks in their assessment of going concern and viability and the associated
disclosures. Where considerations of climate change were relevant to our assessment of going concern, these are described above.
Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key audit
matter, we have considered the impact on the following key audit matters: oil and gas reserves estimation; and impairment of tangible oil
and gas properties and associated goodwill. Details of the impact, our procedures and findings are included in our explanation of key audit
matters below.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as
a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
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ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Risk
Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Accounting for the purchase price
allocation associated with the
Wintershall Dea acquisition
Refer to the Audit and Risk Committee
Report (page 83); Material accounting
policies (pages 135 to 150); and note 14
of the Consolidated financial statements
(pages 165 and 166).
As more fully described in note 14 to the
consolidated financial statements, on
3 September 2024 Harbour completed the
acquisition of the Wintershall Dea portfolio
for cash consideration of $1,782 million, the
issuance of equity shares of $3,457 million
and contingent consideration estimated at
$52 million. The acquisition was accounted
for under the acquisition method of
accounting which resulted in a fair value of
$14,420 million being attributed to tangible
and intangible oil and gas assets and
goodwill of $3,845 million. Additionally,
liabilities of $14,241 million were recognised
of which $5,500 million related to deferred
tax liabilities.
The accounting for business
acquisitions can be highly complex in
nature, with significant judgement required
to determine the fair values of the assets
and liabilities acquired. This transaction
falls under the scope of IFRS 3 Business
Combinations (IFRS 3) which requires
significant management judgement in
determining the fair value of the net
assets acquired, including tangible and
intangible oil and gas assets.
Our key audit matter focuses on the
valuation of assets acquired and the
completeness of liabilities associated
with the Wintershall Dea acquisition
(the purchase price allocation).
The audit procedures in respect of the purchase price allocation were
performed by the primary audit team, supported by our EY valuations
specialists and by component teams for specific cash flow elements
within the valuation models, working under the primary team’s direction.
Our work to address the identified risks included the following procedures:
we confirmed our understanding of Harbour’s acquisition
accounting process as well as the control environment implemented
by management;
we obtained and read the executed business combination agreement
to understand the terms of the agreement including the consideration
for the transaction;
we engaged the EY valuations team to assist in assessing the
valuation of the contingent consideration recognised as well as the
valuation of the non-voting shares that were issued as part of the
consideration;
we performed a risk-based assessment on the accounts included
in the opening balance sheet for the acquired business to inform
and direct the scope of our purchase price allocation work;
we engaged our valuation specialists to review the purchase price
allocation models and related analysis prepared by management’s
specialist, including attending calls with the specialists to critically
challenge the valuation methodology, key underlying assumptions
and understand subsequent adjustments made to the model;
we evaluated the reasonableness of key underlying assumptions
and estimates used in the valuation models such as quantity of the
oil and gas reserves, production volumes, oil and gas prices, discount
rates and capital and operating expenditures;
we assessed the reasonableness of the judgements and estimates
used by management in determining the values attributed to the
exploration and evaluation assets (2C resources) through validating
the existence of the 2C resources with reference to the reserves and
resources reports prepared by management’s specialist, discussions
with Harbour’s internal specialists and comparing to accepted market
valuation practices for such resources;
with the assistance of our component teams, we assessed the valuation
and completeness of the decommissioning provisions at acquisition
date, which included a ‘roll-back’ from the audited 31 December 2024
balances for all full scope Wintershall Dea components;
we verified that the deferred tax liabilities recognised upon
acquisition were calculated at the rates prevailing in the jurisdictions
to which the respective oil and gas assets relate;
we evaluated and tested the integrity and mathematical accuracy
of the valuation models;
we agreed the resulting goodwill to underlying calculations; and
we inspected the disclosures set out in note 14 to the financial
statements to ensure compliance with IFRS 3 requirements.
To test the fair value of the acquired identifiable oil and gas assets and
contingent consideration, with the assistance of our valuation specialists,
our audit procedures included, amongst others, assessing the
competence, capabilities and objectivity of management’s specialists,
evaluating the prospective financial information used in the valuation
models, testing the completeness and accuracy of underlying data and
evaluating management’s use of valuation methodologies.
Our procedures to evaluate the prospective financial information used in
the valuation models included assessing the key assumptions discussed
above through comparison to current industry, market and economic
trends and forecasts (where available) and to historical results of the
Wintershall Dea business.
We also performed sensitivity analyses to evaluate the impact of
changes in key assumptions to the valuation of the acquired identifiable
oil and gas assets.
We reported to the Audit and Risk
Committee that, based on our
procedures performed:
we are satisfied that the
assumptions, methodologies and
judgements applied to determine the
fair values of the assets and liabilities
acquired are reasonable; and
the disclosures in note 14 of the
consolidated financial statements
are consistent with the results
of the purchase price allocation
exercise and comply with IFRS 3.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
CONTINUED
122
Harbour Energy plc
Annual Report & Accounts 2024
Risk
Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Oil and gas reserves estimation
Refer to the Audit and Risk Committee
Report (page 83); Material accounting
policies (page 135 to 150); and
Additional information (page 202).
At 31 December 2024, Harbour reported
1,249 million barrels of oil equivalent
(mmboe) of proven and probable (2P)
reserves (2023: 361 mmboe).
The estimation and measurement of oil
and gas reserves impacts various material
elements of the financial statements
including depreciation, depletion and
amortisation (DD&A), impairment,
decommissioning provisions and deferred
tax asset (DTA) recoverability. In 2024 the
Group’s 2P reserves increased significantly
as a result of the Wintershall Dea acquisition.
Auditing the estimation of oil and gas
reserves is complex, as there is significant
estimation uncertainty in assessing the
quantities of reserves and resources in
place. Estimation uncertainty is further
elevated given the transition to a low-carbon
economy which could impact life-of-field
assumptions and increase the risk of
underutilised or stranded oil and gas
assets. Also, given the estimation of oil and
gas reserves is complex, there is a risk that
inappropriate management bias influences
the estimates.
Management’s 2P reserves estimates are
prepared by an internal specialist whilst
an external specialist is engaged for the
purpose of assessing the appropriateness
of management’s internal estimates.
The audit procedures in respect of oil and gas reserves estimation were
performed by the primary audit team; our procedures covered 100% of
2P reserve volumes.
Our work to address the identified risks included the following procedures:
we confirmed our understanding of Harbour’s oil and gas reserve
estimation process as well as the control environment implemented
by management;
we assessed the appropriateness of reliance on management’s
internal and external reserve specialists by undertaking procedures
to evaluate their competence and objectivity;
we met separately with management’s internal and external
specialists to understand the basis, and therefore appropriateness,
for any significant variances between the two sets of estimates at a
cash-generating unit (CGU) level;
where variances of a technical nature were identified, we utilised
the knowledge and expertise of an EY internal specialist from our
Financial Accounting Advisory Services practice with significant oil
and gas reserves expertise as part of our work to assess the nature
of the variances and appropriateness of management’s estimates;
we investigated all material volume movements from management’s
prior period estimates and where there was a lack of movement
where changes were expected, based on our understanding of the
Group’s operations and findings from other areas of our audit;
in light of Harbour’s pledge to reach Net Zero for Scope 1 and 2
emissions by 2050 (gross operated basis), we considered the extent
of 2P reserves recognised that are due to be produced beyond 2050
in assessing the potential impact of a risk of stranded assets; and
we ensured the 2P reserve volumes were consistently applied
throughout all relevant accounting processes including DD&A,
impairment, decommissioning provisions and DTA recoverability.
We reported to the Audit and Risk
Committee that, based on our
procedures performed, we had
not identified any errors or factual
inconsistencies with reference
to Harbour’s oil and gas reserves
estimates that would materially
impact the financial statements and
that, as a result, we consider the 2P
reserve estimates to be reasonable.
We reported that all of Harbour’s 2P
reserves are expected to be produced
by 2050. As such we are satisfied
that the risk of there being a material
stranded asset is low. Management
has sufficient time and options to
decarbonise their assets in line with
their stated target, including the use
of carbon capture and storage
facilities – or through the purchase
of carbon credits.
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ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Risk
Our response to the risk
Key observations communicated
to the Audit and Risk Committee
Impairment of tangible oil and gas
properties and associated goodwill
Refer to the Audit and Risk Committee
Report (page 83); Material accounting
policies (pages 135 to 150); and notes
10 and 12 of the Consolidated financial
statements (pages 158 and 159 and
pages 161 and 162).
In the current period, management noted
impairment indicators for certain of the
Group’s assets and recorded a pre-tax
impairment of $352 million (2023: net
pre-tax impairment of $176 million).
Management prepares the tangible asset
impairment tests under the Fair Value Less
Cost to Sell methodology. The impairment
models include a number of estimates
including: future oil and gas prices;
discount rates; inflation rates; production
forecasts; operating expenditures; and
capital expenditures for each CGU.
Changes to any of these key inputs could
lead to a material change in an impairment
or a reversal of impairment, hence this
is considered a key audit matter.
Our audit response was executed by the primary audit team, covering all
assets at risk of material impairment. We performed the following audit
procedures with respect to management’s impairment assessment:
confirmed our understanding of Harbour’s impairment assessment
process, as well as the controls implemented by management;
considered the internal and external sources of information included
in IAS 36 Impairment of Assets to identify any potential indicators of
impairment loss and/or reversal, including any downgrades in oil and
gas reserve estimates or sustained increase/decrease in oil and gas
prices compared to the prior year;
following the identification of impairment indicators, we obtained
the discounted cash flow model that reflects the expectations of an
external market participant for each of these CGUs and tested the
models for integrity which included the use of EY technology tools
to evaluate spreadsheet integrity;
we assessed the appropriateness of management’s oil and gas
price assumptions through comparison with the estimates of
market participants;
in conjunction with our EY valuations specialists, we assessed the
appropriateness of management’s impairment discount rates for
each CGU based on an independent re-calculation of the Group’s
weighted average cost of capital;
we evaluated management’s production profiles through
reconciliation to the results of our audit work in respect of oil
and gas reserves estimation;
we tested the appropriateness of other cash flow assumptions such
as operating expenses, capital expenses and decommissioning
spend by comparing against Board approved plans and actual costs
incurred. We compared inflation and FX rates to recent market
forecasts to assess their reasonableness;
we performed headroom analysis for the oil and gas production
CGUs as part of our assessment of the recoverability of the goodwill
recognised in the Group financial statements; and
we also evaluated the accuracy and completeness of the impairment
disclosures included in the notes to the financial statements.
In assessing the impact of climate transition risk on impairment,
we performed the following procedures:
comparison of Harbour’s long-term oil and gas price assumption to
International Energy Association (IEA) Announced Pledges Scenario
(APS) and Net Zero Emissions (NZE) Scenario;
reasonableness assessment of carbon prices and sensitivity of
future carbon costs in the cash flow models, including comparison
of prices to IEA APS and NZE scenarios;
understood how management intend to achieve their planned Scope
1 and 2 emissions reductions and whether these actions have been
reflected in the cash flow forecasts;
analysed the emissions and production data to understand the current
and future carbon intensity of assets to identify higher risk assets;
evaluated the stranded asset risk arising from useful economic lives
of assets post 2050; and
verified the appropriateness of the climate change sensitivity
included in note 2 of the financial statements.
We reported to the Audit and Risk
Committee that the key assumptions
used within the impairment models
were within a reasonable range and,
based on our testing performed,
we considered the recognition and
valuation of the current period
impairment charge to be reasonable.
Specifically related to our procedures
on climate change, we reported
that Harbour’s oil and gas price
assumptions are reasonable.
We concur with management that
carbon costs are not a sensitive
assumption in the cash flow forecasts;
the results of our independent
sensitivity analysis indicated that
applying the IEA NZE 2050 carbon
prices would not lead to a material
impact on the valuation of oil and
gas assets.
For assets with a higher risk of impact
from climate change, we assessed
the headroom in the most recent
impairment models and checked the
reasonableness of the costed plans
in place to decarbonise the assets.
Overall, we concluded there was no
additional impairment triggers arising
from the impact of climate change
in the 2024 financial statements.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
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124
Harbour Energy plc
Annual Report & Accounts 2024
Principal changes to key audit matters compared to prior year
In the prior year, our auditor’s report included a key audit matter for ‘Tax liabilities and contingencies’ related to the disclosed contingent liability
for the misallocation of hedging positions across certain UK subsidiaries of the Group, which involved judgement related to non-recognition
in the consolidated financial statements and an element of estimation for the potential financial effect. In the current year there have been no
significant updates and we concluded it is not a key audit matter on the basis of the allocation of resources in the course of this year’s audit.
In the current year, we have a new key audit matter in respect of the accounting for the purchase price allocation associated with the
Wintershall Dea acquisition, due to the material impact that this transaction has had on the Group financial statements.
Our application of materiality
We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit
and in forming our audit opinion.
The table below sets out the materiality, performance materiality and threshold for reporting audit differences applied on our audit:
Basis
Materiality
$ million
Performance
materiality
$ million
Reporting threshold
for audit differences
$ million
Overall
0.6% of Total assets
170
85
9
Specific
Applicable for account balances related to the consolidated income
statement and consolidated statement of comprehensive income
2.2% of Adjusted EBITDA
86
43
4
Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures.
Overall materiality
Our key criterion in determining overall materiality remains our perception of the needs of Harbour’s stakeholders. We consider which
earnings, activity or capital-based measure aligns best with the expectations of the users of Harbour’s financial statements. In doing so,
we apply a ‘reasonable investor perspective’, which reflects our understanding of the common financial information needs of the members
of Harbour as a Group. We consider Total Assets (2023: Adjusted EBITDA, which is earnings before interest, tax, depreciation, impairments
and amortisation, adjusted to exclude exploration cost write-off but including exploration and evaluation expenses and new ventures) to be
consistent with the type of measures that are the primary focus of Harbour’s investors for the current reporting period. The Wintershall Dea
acquisition was completed on 3 September 2024 and the future expected profitability of the Group is not fully reflected in the year ended
31 December 2024 as only four months of operations of the acquired Group are included in the consolidated financial statements.
In addition, the current underlying oil & gas assets will enable the Group to significantly increase its production from its diversified assets
portfolio in the future and hence enhance its underlying profitability. We have therefore assessed that Total Assets is the most appropriate
basis for determining overall materiality for our 2024 audit. We expect to revert back to using Adjusted EBITDA as our overall materiality
basis for the year ending 31 December 2025. Therefore, we have capped this year’s overall materiality to an amount not exceeding the
materiality expected to result from using Adjusted EBITDA as the materiality basis for the year ending 31 December 2025.
Based on the above, we determined overall materiality for the Group to be $170 million (2023: $72 million), which is 0.6% of Total Assets
(2023: 2.7% of Adjusted EBITDA).
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Harbour Energy plc
Annual Report & Accounts 2024
Specific materiality
We assessed that for the consolidated income statement and consolidated statement of comprehensive income, a misstatement of less than
overall materiality for the financial statements could influence the economic decisions of users. We have determined that specific materiality
for these areas should be based on Adjusted EBITDA. We believe that Adjusted EBITDA provides us with a measure that is also of particular
focus to shareholders and is closely linked to both the metric used in the covenant included in the Group’s major loan agreement and the key
performance indicator for the Group, EBITDAX, which is Earnings before interest, tax, depreciation, amortisation and exploration. Measures
such as EBITDAX are a primary indicator of company valuation and cash flow generation across the upstream oil and gas sector. This resulted
in a specific materiality of $86 million (2023: no specific materiality was used).
Starting
basis
Adjustments
Materiality
• $4,006 million (EBITDAX)
• Less adjustments related to:
Exploration and evaluation expenses and new ventures of $68 million
• Basis: Adjusted EBITDA of $3,938 million
• Materiality of $86 million (2.2% of Adjusted EBITDA)
We determined materiality for the parent company to be $73 million (2023: $27 million), which is 0.8% (2023: 0.7%) of Total Assets.
Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was
that overall performance materiality and specific performance materiality (ie our tolerance for misstatement in the individual account
or balance) was 50% (2023: 50%) of the respective materiality. We have set performance materiality at this percentage due primarily
to the major acquisition of Wintershall Dea during the year ended 31 December 2024 and the resulting significant effect on the Group’s
operations and financial statements.
Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken
based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale
and risk of the component to the Group as a whole and our assessment of the risk of misstatement at that component. In the current year,
the range of overall performance materiality allocated to components was $14.5 million to $51 million (2023: $6.5 million to $26 million)
and specific performance materiality allocated to components was $7.3 million to $25.8 million (2023: no specific materiality was used).
Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial. We agreed with the Audit and Risk Committee that
we would report to them all uncorrected audit differences in excess of $8.5 million (2023: $3.6 million) which is set at 5% of overall materiality,
as well as uncorrected audit differences in excess of $4.3 million in respect of our specific testing of the consolidated income statement and
consolidated statement of comprehensive income, which is also set at 5% of specific materiality (2023: no specific reporting threshold was
applied). We also agreed to report differences below those thresholds that, in our view, warranted reporting on qualitative grounds. We evaluate
any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
CONTINUED
126
Harbour Energy plc
Annual Report & Accounts 2024
Other information
The other information comprises the information included in the annual report set out on pages 1 to 208, including the Strategic report,
Governance and Additional information sections, other than the financial statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify
such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in accordance with the Companies
Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in the course
of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if,
in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance
Statement relating to the Group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our
review by the UK Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the financial statements or our knowledge obtained during the audit:
directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 37;
directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period
is appropriate set out on page 63;
directors’ statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets
its liabilities set out on page 63;
directors’ statement on fair, balanced and understandable set out on page 117;
the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 61;
the section of the annual report that describes the review of effectiveness of risk management and internal control systems set
out on page 62; and
the section describing the work of the Audit and Risk Committee set out on page 82.
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GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 117, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and parent company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including
fraud is detailed below.
However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company
and management.
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most
significant are those that relate to the reporting framework (UK-adopted international accounting standards, Companies Act 2006, the
UK Corporate Governance Code and the UK Listing Rules of the Financial Conduct Authority) and the relevant tax compliance regulations
in the jurisdictions in which Harbour Energy plc operates. In addition, we concluded that there are certain significant laws and
regulations that may have an effect on the determination of the amounts and disclosures in the financial statements, relating to health
and safety, employee matters, environmental, and bribery and corruption practices. We understood how Harbour Energy plc is complying
with those frameworks by making enquiries of management, internal audit, legal counsel and the Company Secretary. We corroborated
our enquiries through inspection of board minutes, papers provided to the Audit and Risk Committee and correspondence received
from regulatory bodies and there was no contradictory evidence. We assessed the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur by considering the degree of incentive, opportunity and rationalisation that may
exist to undertake fraud. We also considered performance targets and their potential impact on risks related to managing earnings or
influencing the perceptions of analysts. We engaged our forensics specialists to assist with our assessment of the susceptibility of the
Group’s financial statements to fraud. We have determined there is a risk of fraud associated with management override related to
manual revenue journals that do not follow the expected process. We performed audit procedures to address the identified fraud
risk. These procedures were designed to provide reasonable assurance that the financial statements as a whole are free from material
misstatement, due to fraud or error.
Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our
procedures involved journal entry testing with a focus on manual consolidation journals and journals indicating large or unusual
transactions based on our understanding of the business; enquiries of legal counsel, Group management, internal audit and component
management at all full scope components; review of the volume and nature of whistleblowing complaints received during the year;
and focused testing, including in respect of management override through manual revenue journals and specific searches derived
from forensic investigations experience. Any instances of non-compliance with laws and regulations identified that might have an
impact on components were communicated to the component audit teams and considered in our audit approach.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website
at frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HARBOUR ENERGY PLC
CONTINUED
128
Harbour Energy plc
Annual Report & Accounts 2024
Other matters we are required to address
Following the recommendation from the Audit and Risk Committee we were appointed by the company on 21 April 2021 to audit the
financial statements for the year ending 31 December 2021 and subsequent financial periods.
On 31 March 2021, Harbour Energy plc (formerly Premier Oil plc) acquired Chrysaor Holdings Limited as part of a reverse acquisition.
EY was the auditor of Premier Oil plc from the period ended 31 December 2017 up to and including the period ended 31 December 2020.
As a result, the period of total uninterrupted engagement including previous renewals and reappointments is eight years, covering
the period from our appointment as auditors of Premier Oil plc for the period ended 31 December 2017 to the period ended
31 December 2024 as auditors of Harbour Energy plc.
The audit opinion is consistent with the additional report to the Audit and Risk Committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Smyth (Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London, United Kingdom
6 March 2025
129
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Note
2024
$ million
2023
As restated
$ million
Revenue
4
6,158
3,715
Other income
4
68
36
Revenue and other income
6,226
3,751
Cost of operations
5
(3,613)
(2,376)
Impairment of property, plant and equipment
5, 12
(352)
(176)
Impairment of right-of-use assets
13
(20)
Impairment of goodwill
5, 10
(25)
Exploration and evaluation expenses and new ventures
5
(68)
(36)
Exploration costs written-off
5
(173)
(57)
General and administrative expenses
5
(352)
(149)
Operating profit
1,648
932
Finance income
7
173
104
Finance expenses
7
(602)
(420)
Profit before taxation
1,219
616
Income tax expense
8
(1,312)
(571)
(Loss)/profit for the year
(93)
45
(Loss)/profit for the year attributable to:
Equity owners of the company
(108)
45
Subordinated notes investors
15
(93)
45
(Loss)/earnings per share
Note
$ cents
$ cents
Basic
Ordinary shares voting
9
(10)
6
Ordinary shares non-voting
9
(11)
Diluted
Ordinary shares voting
9
(10)
6
Ordinary shares non-voting
9
(11)
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
130
Harbour Energy plc
Annual Report & Accounts 2024
2024
$ million
2023
As restated
$ million
(Loss)/profit for the year
(93)
45
Other comprehensive income/(loss)
Items that will not be subsequently reclassified to income statement
Actuarial losses
(6)
Tax credit on actuarial losses
4
Net other comprehensive (loss)/income that will not be subsequently reclassified to income
statement
(2)
Items that may be subsequently reclassified to income statement:
Fair value (losses)/gains on cash flow hedges
(545)
3,168
Tax credit/(charge) on cash flow hedges
379
(2,376)
Exchange differences on translation
130
103
Net other comprehensive (loss)/income that may be subsequently reclassified to income statement
(36)
895
Other comprehensive (loss)/income for the year, net of tax
(38)
895
Total comprehensive (loss)/income for the year
(131)
940
Total comprehensive income attributable to:
Equity owners of the company
(146)
940
Subordinated notes investors
15
(131)
940
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
131
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Note
2024
$ million
2023
As restated
$ million
Assets
Non-current assets
Goodwill
10
5,147
1,302
Other intangible assets
11
5,714
1,172
Property, plant and equipment
12
14,543
4,836
Right-of-use assets
13
656
632
Deferred tax assets
8
130
7
Other receivables
16
176
309
Other financial assets
23
44
112
Total non-current assets
26,410
8,370
Current assets
Inventories
15
368
217
Trade and other receivables
16
2,316
873
Other financial assets
23
145
170
Cash and cash equivalents
17
805
286
3,634
1,546
Assets held for sale
18
277
Total current assets
3,911
1,546
Total assets
30,321
9,916
Equity and liabilities
Equity
Share capital
25
171
171
Merger reserve
25
3,728
271
Other reserves
(18)
18
Retained earnings
807
1,093
Equity attributable to equity holders of the company
4,688
1,553
Equity attributable to subordinated notes investors
26
1,563
Total equity
6,251
1,553
Non-current liabilities
Borrowings
22
4,215
493
Provisions
21
7,024
3,905
Deferred tax
8
6,221
1,297
Trade and other payables
20
30
13
Lease creditor
13
551
552
Other financial liabilities
23
415
87
Total non-current liabilities
18,456
6,347
Current liabilities
Trade and other payables
20
1,755
915
Borrowings
22
1,014
16
Lease creditor
13
241
216
Provisions
21
497
230
Current tax liabilities
1,412
442
Other financial liabilities
23
462
197
5,381
2,016
Liabilities directly associated with the assets held for sale
18
233
Total current liabilities
5,614
2,016
Total liabilities
24,070
8,363
Total equity and liabilities
30,321
9,916
The notes on pages 135 to 191 form part of these financial statements.
The financial statements on pages 130 to 191 were approved by the board of directors and authorised for issue on 5 March 2025
and signed on its behalf by:
Alexander Krane
Chief Financial Officer
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2024
132
Harbour Energy plc
Annual Report & Accounts 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2024
Share
capital
$ million
Merger
reserve
1
$ million
Capital
redemption
reserve
$ million
Cash flow
hedge
reserve
2
$ million
Costs of
hedging
reserve
2
$ million
Currency
translation
reserve
$ million
Retained
earnings
$ million
Equity
attributable
to owners of
the company
$ million
Equity
attributable to
subordinated
notes investors
$ million
Total
equity
$ million
At 1 January 2023
171
271
8
(776)
(9)
(100)
1,456
1,021
1,021
Profit for the year as restated
45
45
45
Other comprehensive income
779
13
103
895
895
Total comprehensive income as
restated
779
13
103
45
940
940
Purchase and cancellation
of own shares
(249)
(249)
(249)
Share-based payments
46
46
46
Purchase of ESOP trust shares
(15)
(15)
(15)
Dividends paid
(190)
(190)
(190)
At 31 December 2023
as restated
171
271
8
3
4
3
1,093
1,553
1,553
(Loss)/profit for the year
(108)
(108)
15
(93)
Other comprehensive (loss)/
income
(188)
22
130
(2)
(38)
(38)
Total comprehensive (loss)/
income
(188)
22
130
(110)
(146)
15
(131)
Issue of new shares
3,457
3,457
3,457
Share-based payments
48
48
48
Purchase of ESOP trust shares
(25)
(25)
(25)
Acquired through business
combination
1,548
1,548
Dividends paid
(199)
(199)
(199)
At 31 December 2024
171
3,728
8
(185)
26
133
807
4,688
1,563
6,251
1
The increase in the merger reserve represents the difference between the fair value and nominal value of the shares issued as consideration for the acquisition of the Wintershall Dea
assets.
2
Disclosed net of deferred tax.
133
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Note
2024
$ million
2023
As restated
$ million
Net cash inflow from operating activities
29
1,615
2,150
Investing activities
Expenditure on exploration and evaluation assets
(359)
(202)
Expenditure on property, plant and equipment
12
(884)
(496)
Expenditure on non-oil and gas intangible assets
(42)
(20)
Expenditure on other intangible assets
(37)
(81)
Acquisition of subsidiaries, net of cash acquired
14
(1,044)
Finance income received
76
93
Other receipts
13
13
Net cash outflow from investing activities
(2,277)
(693)
Financing activities
Repurchase of shares
(249)
Proceeds from new borrowings – revolving credit facility
29
2,225
Proceeds from new borrowings – reserve based lending facility
29
178
660
Proceeds from bridge facility
29
1,500
Proceeds from bond issuance net of transaction costs
29
1,720
Payments of principal portion of lease liabilities
(265)
(207)
Interest paid on lease liabilities
(54)
(52)
Repayment of revolving credit facility
29
(1,975)
Repayment of reserve based lending facility
29
(178)
(1,435)
Repayment of bridge facility
29
(1,500)
Repayment of exploration financing facility
(11)
Repayment of financing arrangement
29
(17)
(21)
Purchase of ESOP trust shares
(25)
(12)
Interest paid and bank charges
(181)
(150)
Dividends paid to shareholders
31
(199)
(190)
Net cash inflow/(outflow) from financing activities
1,229
(1,667)
Net increase/(decrease) in cash and cash equivalents
567
(210)
Net foreign exchange difference
(37)
(4)
Reclassification of Vietnam cash as asset held for sale
(11)
Cash and cash equivalents at 1 January
286
500
Cash and cash equivalents at 31 December
805
286
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2024
134
Harbour Energy plc
Annual Report & Accounts 2024
 
Harbour Energy plc
Annual Report & Accounts 2024
135
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Corporate information
Harbour Energy plc is a limited liability company incorporated in Scotland and listed on the London Stock Exchange. The address of the
registered office is 4
th
Floor, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN, United Kingdom.
The consolidated financial statements of Harbour Energy plc (Harbour or the company) and all its subsidiaries (the Group) for the year ended
31 December 2024 were authorised for issue by the board of directors on 5 March 2025.
On 3 September 2024, the Group completed the acquisition of substantially all of Wintershall Dea’s upstream oil and gas assets, including
those in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria as well as Wintershall Dea’s CCS licences in Europe. Under
IFRS 3 Business Combinations, the Group is the legal and accounting acquirer as it obtained control over the Wintershall Dea portfolio
through the business combination: as it was the entity that issued equity and paid cash to effect the business combination; at completion
the existing Harbour Energy shareholders held a majority of voting ordinary shares; and from completion, day-to-day management of the
enlarged group has been led by existing Harbour Energy personnel, with no change to the executive directorship.
The Group has designated 1 September 2024 as the acquisition date (beginning of month) rather than the actual acquisition date of
3 September 2024 (during the month) as the events between the designated acquisition date and the actual acquisition date do not
result in material changes in the amounts recognised.
The acquired Wintershall Dea portfolio results are fully consolidated in the financial statements from 1 September 2024, and all results
prior to this date represent those of the legacy Harbour group only.
The Group’s principal activities are the acquisition, exploration, development and production of oil and gas reserves in Norway, the UK,
Germany, Mexico, Argentina, North Africa and Southeast Asia.
2. Material accounting policies
Basis of preparation
The consolidated financial statements have been prepared on a going concern basis in accordance with UK-adopted International Accounting
Standards (IAS) in conformity with the requirements of the Companies Act 2006. The analysis used by the directors in adopting the going
concern basis considers the various plans and commitments of the Group as well as various sensitivity and reverse stress test analyses.
The results from the severe but plausible downside sensitivities and reverse stress tests with regard to production and commodity price
assumptions, which in management’s view reflect two of the principal risks, indicate that material changes within one year that would impact the
going concern basis of preparation are remote. Further details are within the Financial review on page 32 and Viability statement on page 63.
In 2023, the Vietnam Business Unit was classified as an asset held for sale, however because this deal did not complete the prior year
accounts have been restated to classify the assets and liabilities back to their original balance sheet line items.
The presentation currency of the Group financial information is US dollars and all values in the Group financial information are presented
in millions ($ million) and all values are rounded to the nearest 1 million, except where otherwise stated.
The financial statements have been prepared on the historical cost basis, except for certain financial assets and liabilities, including
derivative financial instruments, which have been measured at fair value.
The accounting policies which follow set out those policies which apply in preparing the financial statements for the year ended
31 December 2024. All accounting policies are consistent with those adopted and disclosed in Harbour’s 2023 Annual Report & Accounts.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the company and its subsidiaries as at 31 December 2024.
Subsidiaries are those entities over which the Group has control. Control is achieved where the Group has the power over the subsidiary,
has rights, or is exposed to variable returns from the subsidiary and has the ability to use its power to affect its returns. All subsidiaries
are 100 per cent owned by the Group, except for four entities holding interests in operations in North Africa and CCS projects which are
accounted for as joint operations.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the company and to the
subordinated notes investors.
If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and
other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.
The results of subsidiaries acquired or disposed of during the year are included in the income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements
of subsidiaries acquired to bring the accounting policies used into line with those used by other members of the Group.
All intra-group transactions and balances have been eliminated on consolidation.
Prior year adjustment
In August 2023, Harbour announced that it had entered into a Sale and Purchase Agreement (SPA) to sell its business in Vietnam,
which holds its 53.125 per cent interest in Chim Sáo and Dua producing fields to Big Energy Joint Stock Company for a consideration
of $84 million. At 31 December 2023, the assets and liabilities of Vietnam were classified as assets held for sale (AHFS). The transaction,
which had a long-stop date of 10 May 2024, could not be completed within the required timeframe, and was subsequently terminated
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
 
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
2. Material accounting policies
continued
Harbour Energy plc
Annual Report & Accounts 2024
136
on 13 May 2024, and as a result the Vietnam business was no longer classified as AHFS. The relevant amounts presented as AHFS
in the 31 December 2023 consolidated financial statements have been reclassified. Each of the affected financial statement line items
has been restated and the impact is summarised in the following table.
Balance sheet at 31 December 2023
   
 
As previously
   
 
reported
Adjustments
As restated
 
$ million
$ million
$ million
Non-current assets
     
Property, plant and equipment
4,717
119
4,836
Right-of-use assets
587
45
632
Other receivables
184
125
309
Current assets
     
Inventories
200
17
217
Trade and other receivables
832
41
873
Cash and cash equivalents
280
6
286
Assets held for sale
334
(334)
Equity
     
Retained earnings
1,080
13
1,093
Non-current liabilities
     
Provisions
3,818
87
3,905
Deferred tax
1,260
37
1,297
Lease creditor
474
78
552
Current liabilities
     
Trade and other payables
886
29
915
Lease creditor
199
17
216
Liabilities directly associated with the assets held for sale
242
(242)
From the point of classification as AHFS in August 2023, no depreciation was recorded. In addition, at 31 December 2023, a pre-tax impairment of
$38 million was recognised as the fair value less cost to sell was below the carrying amount of the disposal group. As a result of the reclassification
from AHFS, the impairment of $38 million has been reversed and additional depreciation covering the period August 2023 to December 2023
has been recorded, on property, plant and equipment of $14 million and on right-of-use assets of $5 million, with net deferred tax of $6 million
associated with the impairment reversal and depreciation. As a result of the above adjustments, retained earnings increased by $13 million.
In December 2024, the Group entered into an exclusivity agreement to sell its business in Vietnam to EnQuest for a consideration of
$84 million. The transaction has an effective date of 1 January 2024. As a result, the assets and liabilities of Vietnam have been classified
as held for sale as at 31 December 2024 (see note 18).
Significant accounting judgements and estimates
The preparation of the Group’s financial statements in conformity with UK-adopted IAS requires management to make judgements, estimates
and assumptions at the date of the financial statements. Estimates and assumptions are continuously evaluated and are based
on management experience and other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment
to the carrying amount of the assets or liabilities affected in future periods.
In preparing these financial statements, management has made judgements and estimates that affect the application of accounting policies
and the reported amounts of assets and liabilities, income and expenses including those that have the potential to materially impact the
balance sheet over the next 12 months. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group’s accounting policies, and the key sources of estimation uncertainty,
were the same as those described in Harbour’s 2023 Annual Report & Accounts, with the addition of the purchase price allocation that
involved a number of judgements in regard to assessing the fair value of assets and liabilities acquired from Wintershall Dea.
Judgements
Significant accounting judgements considered by the Group are:
The carrying value of intangible exploration and evaluation assets, in relation to whether commercial determination of an exploration
prospect had been reached;
The carrying value of property, plant and equipment regarding assessing assets for indicators of impairment;
Decommissioning costs in relation to the timing of when decommissioning would occur; and
Tax including assessment of risks around tax uncertainties and the recognition of deferred tax assets (see note 8).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
137
Key sources of estimation uncertainty
Details of the Group’s critical accounting estimates are set out in these financial statements and are:
Purchase price allocation that involved a number of judgemental estimates in determining the fair value of assets and liabilities acquired
from Wintershall Dea. See note 14 for further information;
The carrying value of property, plant and equipment and goodwill, where the key assumptions relate to oil and gas prices expected
to be realised and the estimation of 2P reserves and production profiles. See notes 10 and 12 for further information;
Decommissioning costs where the key assumptions relate to the discount and inflation rates applied, applicable rig rates and expected
timing of cessation of production (COP) on each field. See note 21 for further information;
Defined benefit obligations due to volatility arising from actuarial assumptions, such as the discount rate and pension growth.
See note 28 for further information;
The provision for, or disclosure of, areas of uncertainty for tax purposes where the key assumptions are driven by technical analysis
corroborated by external advice; and
Recognition of deferred tax assets and liabilities, where key assumptions relate to oil and gas prices expected to be realised,
and production profiles. See note 8 for further information.
Disclosure regarding the judgements and estimates made in assessing the impact of climate change and the energy transition are described
below and references to notes in the financial statements are provided.
The results from downside sensitivities prepared with regard to production and commodity price assumptions, which in management’s view
reflect the principal risks, indicate that material changes that would impact the carrying amounts of assets and liabilities within the next
financial year are unlikely.
Further information is provided in the Audit and Risk Committee report on page 82.
Impact of climate change on the financial statements and related disclosures
Judgements and estimates made in assessing the impact of climate change and the energy transition
Harbour monitors global climate change and energy transition developments and plans. Management recognises there is a general high level
of uncertainty about the speed and scale of impacts which, together with limited historical information, provides challenges in the preparation
of forecasts and plans with a range of possible future scenarios, which may have the potential to materially impact the balance sheet.
The Group’s strategic aspiration is to be net zero by 2050 with an interim target of a 50 per cent reduction in Scope 1 and 2 emissions
by 2030 against the 2018 baseline. This will be achieved through several opportunities, including operational efficiency improvements,
targeted decarbonisation projects and the eventual cessation of production of mature fields. In addition, the company is investing in the
development of CCS projects in the UK and Europe.
All new economic investment decisions include the cost of carbon, and opportunities are assessed on their climate-impact potential and
alignment with Harbour Energy’s net zero aspiration taking into consideration both GHG volumes and intensity. The acquisition during the
year has helped to advance our energy transition objective by strategically shifting our portfolio towards natural gas. Over time this move is
expected to notably reduce our greenhouse gas intensity on a net equity basis. The corporate modelling that supports the preparation of
the financial statements (such as asset and goodwill impairment assessment, going concern and viability, deferred tax asset recoverability)
includes project costs related to CCS, certain decarbonisation projects once sanctioned, other activities to reduce gross operated Scope 1
and 2 GHG emissions, the UK and EU Emissions Trading Scheme costs and carbon offset purchases. Emissions reduction incentives are
part of staff remuneration through the annual bonus programme.
Climate change and the energy transition have the potential to significantly impact the accounting estimates adopted by management and
therefore the valuation of assets and liabilities reported on the balance sheet. On an ongoing basis, management continues to assess the
potential impacts on the significant judgements and estimates used in the preparation of the financial statements. Estimates adopted in the
financial statements reflect management’s best estimate of future market conditions where, in particular, commodity prices can be volatile.
Commodity and carbon price curve assumptions are described below noting that there is consideration given to other assumptions, not
exhaustively, such as foreign exchange and discount rates. Notwithstanding the challenges around climate change and the energy transition,
it is management’s view that the financial statements are consistent with the disclosures in the Strategic report.
This note provides insight into how Harbour has considered the impact on valuations of key line items in the financial statements and how
they could change based on the climate change scenarios and sensitivities considered. The scenarios presented show what the possible
impact could be on the financial statements considering both high and low commodity and carbon price outlooks plus discount rates range.
Importantly, these climate change scenarios do not form the basis of the preparation of the financial statements but rather indicate how
the key assumptions that underpin the financial statements would be impacted by the climate change scenarios. They are also designed to
challenge management’s perspective on the future business environment. It is recognised that the reality of the nature of progress of energy
transition will bring greater levels of disruption and volatility than these external scenarios expect and do not represent management’s
current best estimate.
The financial statements have been prepared using management’s current best estimate for the foreseeable future, based on a range
of economic forecasts and represented by the Harbour scenario oil price curve. Management regularly reviews these estimates and
assumptions to ensure they align with the latest economic conditions and market information.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
138
2. Material accounting policies
continued
Property, plant and equipment, and goodwill
Transitioning to lower carbon energy as the energy transition progresses has the potential to significantly impact future commodity and
carbon prices which would, in turn, affect the future operating and capital costs, estimates of cessation of production, useful lives, and
consequently the recoverable amount of property, plant and equipment and goodwill.
The non-current assets of the Group, particularly goodwill and oil and gas assets within property, plant and equipment, are considered to
be the most sensitive to the energy transition. The carrying value of these assets and goodwill notably increased during the year, primarily
attributed to the completion of the Wintershall Dea acquisition in the second half of the year.
Depreciation, estimated useful life and risk of stranded assets
The energy transition and the rate of its progression may impact the remaining lifespan of assets. Typically, the Group’s oil and gas assets
are depreciated using a unit of production method, which is based on the ratio of production in the year to the commercial proven and
probable reserves of the field, considering future capital development expenditures.
As at 31 December 2024, the Group’s production plans for existing assets indicated that 44 per cent, 18 per cent and nil per cent of the
commercial proven and probable reserves would remain by 2030, 2035, and 2050, respectively. Using the unit of production depreciation
method, the carrying amounts for the oil and gas assets are depreciated in line with the depletion of reserves. An evaluation of the oil and
gas assets as at 31 December 2024 indicated that the oil and gas assets would experience significant additional depreciation by 2030
and near-complete depreciation by 2035, based on the planned depletion of reserves.
This indicates that a substantial portion of proven and probable reserves are anticipated to be produced by 2035, resulting in lower risk of
stranded assets being carried in the consolidated balance sheet. The Group’s portfolio management approach aims to mitigate the risk of
stranded assets in the event of a faster-than-expected structural decline in demand for oil and gas due to tighter environmental regulations,
changes in market demands and global energy demand.
Impairment of property, plant and equipment, and goodwill
The important assumptions for impairment testing of goodwill and oil and gas assets applied to the life of fields production and cost profiles
include commodity and carbon prices and discount rates. These key assumptions are carefully assessed by management, both in isolation
and in aggregate, to ensure there is a fair and balanced view attained with minimal aggregate bias. These assumptions are inherently
uncertain and may ultimately diverge from the actual amounts.
During the current year’s impairment testing, the Harbour scenario utilised real long-term commodity price assumptions from 2028 for Brent
crude at $78 per barrel (2023: $70 per barrel), UK NBP gas at 80 pence per therm (2023: 90 pence per therm), and a European gas price
at 2 per cent higher than UK NBP. These were combined with short-term management forecasts reflecting benchmarked consensus and
market forward curves at the year end.
Carbon costs are expected to evolve over time and are subject to significant uncertainty due to the rate of transition and the maturity
of regulatory frameworks. For the carbon price, Harbour management’s real forward price curve assumption in 2024 is $72 per tonne
(2023: $63 per tonne), projected to increase to $182 per tonne (2023: $175 per tonne) by 2030. Sensitivity analysis was conducted
using the IEA Net Zero carbon price curve, with a flat assumed foreign exchange rate of pound sterling to US dollar rate of £1:$1.30.
Sensitivity to changes in commodity price assumptions
Sensitivity analyses on the impairment of oil and gas assets and goodwill have been conducted using different commodity price scenarios
to demonstrate the potential impact on their net book carrying values. It should be noted that the financial statements are based on the
Harbour scenario. Impairment sensitivities have been developed using average -10 per cent and +10 per cent deviations from the Harbour
scenario long-term crude and gas prices as well as selected published climate change price curves.
The sensitivity scenarios described below incorporate changes to the commodity price assumptions and assume that all other factors
remain unchanged from the Harbour scenario used for the basis of preparation of the financial statements. Importantly, these sensitivities
are stated before any management mitigation actions to manage downside risks if the scenarios were to occur.
The Sustainability review on pages 38 to 59 discusses both transition and physical risk climate change scenarios. This analysis covers the
transition risks and the graphs opposite show the crude oil, UK NBP gas price curves and European TTF gas price for the period to 2050
for the following IEA scenarios: Net Zero Emissions by 2050, Stated Policies and Announced Pledges.
All the scenario price curves are dependent on factors covering supply, demand, economic and geopolitical events and therefore are
inherently uncertain and subject to significant volatility and hence unlikely to reflect the future outcome.
Harbour scenario: base price curves used for impairment testing
IEA Net Zero Emissions by 2050 (NZE): pathway to limiting global temperature rise to 1.5ºC
IEA Stated Policies Scenario (STEPS): pathway based on existing policy commitments and measures and those currently under
development by sector and country
IEA Announced Pledges Scenario (APS): pathway based on current climate ambitions and targets by governments and industries
regardless of whether these have been legislated
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
139
0
20
40
60
80
100
2050
2049
2048
2047
2046
2045
2044
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
$/bbl
Crude
$/bbl
Crude
Harbour scenario
NZE
STEPS
APS
0
5
10
15
20
2050
2049
2048
2047
2046
2045
2044
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
$/mscf
Gas
Harbour scenario
NZE
STEPS
APS
The crude price curves reflect the published IEA price curves for all periods. For UK NBP there are no IEA published price curves therefore
management has derived the gas price curves by converting from the published IEA European gas price curve. This was achieved by
converting from USD per mbtu to USD per mscf and applying other known correlation coefficients between the European and UK gas
markets. In addition, for the period 2025-2027, the derived gas price curve matches the Harbour scenario price curve to create a scenario
that was considered reasonably plausible.
Pre-development assets are recorded in other intangible assets ahead of demonstration of commerciality and recognition of 2P reserves
and hence are not included below, however they are subject to the same management rigour with the corporate models. The majority of
such assets are in developing countries with a growing future demand for energy which may reduce the climate change impact from these
pre-development assets.
The impact of the sensitivities on the carrying value of oil and gas assets and goodwill in the consolidated balance sheet are shown in the
table below:
31 December 2024
Pre-tax sensitivity in carrying value
$ million
IEA Net Zero
IEA Stated
IEA Announced
Carrying value
+10% price to
-10% price to
Emissions by
Policies
Pledges
Commodity
$ million
Harbour scenario
Harbour scenario
2050 (NZE)
(STEPS)
(APS)
Goodwill
Crude oil
(45)
(928)
(38)
(note 10)
5,147
Gas
(37)
(1,431)
(997)
(1,114)
Oil and gas
Crude oil
(323)
(2,528)
(415)
assets
14,458
(note 12)
Gas
(2)
(131)
(89)
(35)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
140
2. Material accounting policies
continued
31 December 2023
   
     
Pre-tax sensitivity in carrying value
     
$ million
         
IEA Net Zero
IEA Stated
IEA Announced
   
Carrying value
+10% price to
-10% price to
Emissions by
Policies
Pledges
 
Commodity
$ million
Harbour scenario
Harbour scenario
2050 (NZE)
(STEPS)
(APS)
Goodwill
Crude oil
 
(note 10)
 
1,302
         
 
Gas
 
(4)
Oil and gas
Crude oil
 
(86)
(221)
assets
 
4,822
         
(note 12)
Gas
 
(21)
(9)
The 2024 results and sensitivities are dominated by the acquired Wintershall Dea portfolio which has substantially increased the goodwill
and property, plant and equipment carrying values.
The +/-10 per cent price curves used in the Harbour scenarios adjust long-term prices from 2028.
Under the -10 per cent price to Harbour scenario for crude, there is a pre-tax impairment to oil and gas assets of $323 million and
on goodwill an impairment of $45 million. For gas a pre-tax impairment of $2 million and on goodwill an impairment of $37 million.
For crude, under the IEA NZE 2050 scenario, there is a pre-tax impairment to oil and gas assets of $2,528 million and on goodwill an
impairment of $928 million. For gas, there is a pre-tax impairment to oil and gas assets of $131 million and on goodwill an impairment
of $1,431 million.
For crude, under the IEA STEPS, there is no pre-tax impairment to oil and gas assets or goodwill. For gas, there is a pre-tax impairment
to oil and gas assets of $89 million and on goodwill an impairment of $997 million.
For crude, under the IEA APS, there is a pre-tax impairment to oil and gas assets of $415 million and on goodwill an impairment of
$38 million. For gas there is a pre-tax impairment to oil and gas assets of $35 million and on goodwill an impairment of $1,114 million.
Sensitivity to changes in carbon price assumptions
The sensitivity scenarios described below incorporate changes to the carbon price assumptions and assume that all other factors remain
unchanged from the Harbour scenario used for the basis of preparation of the financial statements. This sensitivity is stated before any
management mitigation actions to manage downside risks if the scenarios were to occur.
The risk of stranded assets may increase in a higher carbon price scenario. Sensitivity analyses of the carrying value of Harbour’s oil and
gas assets and goodwill to carbon prices have been conducted based on the IEA NZE 2050 scenario. This aims to demonstrate the resilience
of the assets’ carrying values to higher long-term carbon prices than those reflected in the consolidated balance sheet.
This analysis covers the transition risks, and the graph below shows the carbon price per tonne for the period to 2050 for the IEA NZE
2050 scenario.
The scenario price curves are dependent on factors covering supply, demand, economic and geopolitical events and therefore are inherently
uncertain and subject to significant volatility. As a result, they are unlikely to accurately predict future outcomes.
Harbour scenario: base price curves used for impairment testing
IEA Net Zero Emissions by 2050 (NZE): pathway to limiting global temperature rise to 1.5°C
0
100
200
300
400
500
2050
2049
2048
2047
2046
2045
2044
2043
2042
2041
2040
2039
2038
2037
2036
2035
2034
2033
2032
2031
2030
2029
2028
2027
2026
2025
$/tonne
Carbon
Harbour scenario
NZE
STRATEGIC REPORT
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
141
Applying the IEA NZE 2050 carbon price scenario for the entirety of the useful economic life of the assets resulted in a pre-tax impairment
of $9 million (2023: $27 million) to oil and gas assets with no impairment to goodwill under this scenario.
Sensitivity to changes in discount rate assumptions
The discount rate applied for impairment testing of the fair value less cost of disposal is based on a nominal post-tax weighted average
cost of capital (WACC) after considering both cost of debt and equity. In 2024, the Group’s post-tax discount rate ranging from 8.75 per cent
to 14.5 per cent (2023: 9.0 per cent to 12.4 per cent) is derived after considering relevant peer group’s post-tax WACC and incorporating
segment-specific risk.
Considering the discount rates, the Group deems a 1 per cent rise in the discount rate to be a reasonable potentiality for conducting
sensitivity analysis, assuming that all other factors utilised in calculating the recoverable value for the carrying amount of goodwill and
oil and gas assets remain unaltered.
A 1 per cent increase in the discount rate would result in an additional impairment of $113 million (2023: $24 million) to the oil and
gas assets and on goodwill $10 million (2023: $1 million), and a 1 per cent decrease in the discount rate would have no impact on the
impairment charge.
Intangible assets – exploration and evaluation assets
The energy transition has the potential to affect the future development or viability of exploration and evaluation prospects. A significant
portion of the Group’s exploration and evaluation assets relate to prospects that could either be tied back to existing infrastructure or are
in developing countries with a growing future demand for energy which may reduce the climate change impact from these pre-development
assets and hence require less capital investment as these assets are less exposed to the impacts of the energy transition compared to
large frontier developments. At each balance sheet date, all exploration and evaluation prospects are reviewed against the Group’s financial
framework to ensure that the continuation of activities is planned and expected. There are no significant judgements and/or critical
estimation uncertainty related to climate factors.
See Judgements: Exploration and evaluation expenditure (page 136) and note 11 to the financial statements for further information.
Deferred tax assets
The potential impact of climate change and energy transition on balance sheet items is uncertain and may lead to significant changes in the
estimations of parameters such as the useful life of assets and timing of cessation of production together with their related deferred tax balances.
Deferred tax assets are recognised to the extent that their recovery is considerable probable. In general, it is expected that sufficient
forecasted taxable profits will be available for the recovery of deferred tax assets recognised at 31 December 2024 and expected to
be recovered within the period of production for each asset and after taking into account deferred tax liabilities.
See note 8 Income tax for information on deferred tax balances.
Onerous contracts
Contracts may become onerous due to potential loss of revenue or heightened costs stemming from changes in climate change and energy
transition regulations.
Management does not foresee any of its existing supply contracts becoming onerous based on the current production level and estimated
useful lives of its assets.
Decommissioning cost and provisions
The energy transition may accelerate the decommissioning of assets which would result in an increase in the carrying value of associated
decommissioning provisions. Whilst the Group currently expects to incur decommissioning costs over the next 40 years, we anticipate the
majority of costs will be incurred between the next 10 to 20 years which will reduce the exposure to the impact of the energy transition.
In the current year, the undiscounted provision for decommissioning and restoration was $10.5 billion (2023: $6.6 billion), recognised
on a discounted basis in the consolidated balance sheet.
The discount and inflation rates applied have taken into consideration the applicable rig rates and expected timing of cessation of production
on each field. Therefore, the timing of decommissioning expenditures has not been materially brought forward and management do not
consider that any reasonable change in the timing of decommissioning expenditure will have a material impact on the decommissioning
provisions based on the production plans of existing assets.
Decommissioning cost estimates are based on the current regulatory and external environment. These cost estimates and recoverability of
associated deferred tax may change in the future, including as a result of the energy transition. On the basis that all other assumptions in the
calculation remain the same, a 10 per cent increase in the cost estimates, and a 10 per cent reduction in the applied discount rates used to
assess the final decommissioning obligation, would result in increases to the decommissioning provision of approximately $852 million (2023:
$456 million) and $286 million ($440 million), respectively. This change would be principally offset by a change to the value of the associated
asset unless the asset is fully depreciated, in which case the change in estimate is recognised directly within the income statement.
See Key sources of estimation uncertainty: Decommissioning costs for further information (page 137).
Portfolio changes
Harbour expensed $75 million of costs in relation to CO
2
emissions during 2024 (2023: $69 million) with the majority in relation to the UK
Emissions Trading Scheme quotas net of allocated free quotas. Quotas in relation to future periods are recognised in intangible assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
142
2. Material accounting policies
continued
Harbour has investments in a number of CCS projects which are regarded as key to assisting in the energy transition. Projects are
recognised in intangible assets once the projects are regarded as technically feasible and commercially viable; prior to this, costs are
expensed to the income statement. In 2024 Harbour spent $72 million on CCS activities, capitalising $33 million and expensing $39 million.
Further information on Harbour’s CCS projects can be found on page 31.
Global oil and gas demand considerations
The transition to sustainable energy to mitigate climate change carries the potential to adversely impact commodity prices due to a global
decrease in the demand for oil and gas, potentially leading to reduced revenue. Furthermore, investment in clean energy via the adoption
of clean energy technologies could elevate production costs, thereby diminishing future profit margins.
Based on prevailing policies and regulatory frameworks, it is anticipated that the growth in global oil demand will decrease, but the demand
for oil and gas is projected to continue as a crucial component of the energy mix for the foreseeable future. Natural gas is widely known as
a key transition fuel. In the 2024 IEA World Energy Outlook report the demand for natural gas has been revised upwards in all scenarios
compared to the previous year, reflecting stronger anticipated demand for gas to meet growth in electricity demand.
During the year, the Group produced 258 kboepd (2023: 186 kboepd), accounting for less than 0.3 per cent of global production.
Consequently, the Group does not expect the ability to sell the volume of oil equivalent produced to be directly impacted by shifts in
global oil and gas demand. Management remains committed to investing in a diversified oil and gas company.
Cost of carbon allowances
Harbour is part of the European and UK Emissions Trading Schemes (EU and UK ETS) and purchases carbon allowances to meet its
regulatory obligations under the schemes. Harbour is entitled to receive a share of free allowances according to UK and EU ETS regulations.
Allowances owned in excess of liabilities to date that are available to be used in future periods are recorded in other intangible assets
and measured at cost. The costs for purchasing allowances are recorded in costs of operations matching emissions for the period.
Accruals that are required for allowances to be purchased are measured at market price.
Segment reporting
The Group’s activities consist of one class of business being the acquisition, exploration, development and production of oil and gas
reserves and related activities and are split geographically and managed in nine Business Units: namely Norway, the UK, Germany, Mexico,
Argentina, North Africa, Southeast Asia, CCS and Corporate.
Joint arrangements
A joint arrangement is one in which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
Exploration and production operations are usually conducted through joint arrangements with other parties. The Group reviews all joint
arrangements and classifies them as either joint operations or joint ventures depending on the rights and obligations of each party to
the arrangement and whether the arrangement is structured through a separate vehicle. The Group’s interest in joint operations, such
as exploration and production arrangements, are accounted for by recognising its:
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly
A joint venture, which normally involves the establishment of a separate legal entity, is a contractual arrangement whereby the parties that
have joint control of the arrangement have the rights to the arrangement’s net assets. The results, assets and liabilities of a joint venture
are incorporated in the consolidated financial statements using the equity method of accounting. During 2023, the Group did not have any
interests in joint ventures. Note 33 describes the Group’s interests in joint arrangements as at 31 December 2024.
Where the Group transacts with its joint operations, unrealised profits and losses are eliminated to the extent of the Group’s interest in the
joint operation.
Foreign currency translation
Each entity in the Group determines its own functional currency, being the currency of the primary economic environment in which the entity
operates, and items included in the financial statements of each entity are measured using that functional currency.
The consolidated financial statements are presented in US dollars, which is also the parent company’s functional currency.
Transactions recorded in foreign currencies are initially recorded in the entity’s functional currency by applying an average rate of exchange.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the
reporting date. All differences are taken to the income statement.
Non-monetary assets and liabilities denominated in foreign currencies are measured at historic cost based on exchange rates at the date
of the initial transaction and subsequently not retranslated.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
143
On consolidation, the assets and liabilities of the Group’s operations are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at the average monthly exchange rates for the year. Equity is held at historic cost and is not retranslated. The
resulting exchange differences are recognised as other comprehensive income and are transferred to the Group’s currency translation reserve.
When an overseas operation is disposed of, such translation differences relating to it are recognised as income or expense.
Goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the closing rate.
Goodwill
In the event of a business combination or acquisition of an interest in a joint operation in which the activity constitutes a business, as
defined in IFRS 3 Business Combinations, the acquisition method of accounting is applied. Goodwill represents the difference between
the aggregate of the fair value of purchase consideration transferred at the acquisition date and the fair value of the identifiable assets,
liabilities and contingent liabilities acquired, less any non-controlling interest. If however, the fair value of the purchase consideration
transferred is lower than the fair value of the identifiable assets and liabilities acquired, less non-controlling interest, the difference is
recognised in the income statement as negative goodwill. The Group’s goodwill is related to the requirement to recognise deferred tax for the
difference between the assigned fair values and the related tax base (technical goodwill). The fair value of the Group’s licences are based
on post-tax cash flows or benchmarked multiples. In accordance with IAS 12 paragraphs 15 and 24, a provision is made for deferred tax
corresponding to the difference between the acquisition cost and the transferred tax depreciation basis. The offsetting entry to this deferred
tax is goodwill. Hence, goodwill arises as a technical effect of deferred tax. Goodwill is initially measured at cost. Following initial recognition,
goodwill is measured at cost less any accumulated impairment. Goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s operating segments. This is subsequently tested for impairment at the Group’s operating segment level
based on the aggregation of any headroom arising from asset impairment tests. Goodwill is treated as an asset of the relevant entity to
which it relates, and accordingly non-US dollar goodwill is translated into US dollars at the closing rate of exchange at each reporting date.
Goodwill, as disclosed in note 10, is not amortised but is reviewed for impairment at least annually by assessing the recoverable amount of the
operating segments to which the goodwill relates. Where the carrying amount of the operating segment and related goodwill is higher than the
recoverable amount of the operating segment, an impairment loss is recognised in the income statement. The recoverable amounts of the operating
segments have been determined on a fair value less costs to sell basis. Impairments are expected to arise as the deferred tax that gave rise to the
goodwill initially naturally unwinds in the normal course of business. Impairment losses relating to goodwill cannot be reversed in future periods.
Pre-licence costs
Pre-licence costs are expensed in the period in which they are incurred.
Licence and property acquisition costs
Licence and property acquisition costs paid in connection with a right to explore in an existing exploration area are capitalised as exploration
and evaluation costs within intangible assets.
Licence and property acquisition costs are reviewed at each reporting date to confirm that there is no indication that the carrying amount
exceeds the recoverable amount. If no future activity is planned or the related licence has been relinquished or has expired, the carrying
value of the property acquisition costs is written off through the income statement. Upon recognition of proved reserves and internal
approval for development, the relevant expenditure is transferred to oil and gas properties within development and production assets.
Exploration and evaluation costs
Once the legal right to explore has been acquired, costs directly associated with the exploration are capitalised as exploration and evaluation
(E&E) intangible non-current assets until the exploration is complete and the results have been evaluated. If no potential commercial
resources are discovered, the exploration asset is written off.
All such capitalised costs are subject to technical, commercial and management review, as well as review for indicators of impairment
at least annually. This is to confirm the continued intent to develop or otherwise extract value from the discovery. When this is no longer
the case, the costs are written off through the income statement.
When proved reserves of oil or natural gas are identified and development is sanctioned by management, the relevant capitalised
expenditure is first assessed for impairment and, if required, any impairment loss is recognised, then the remaining balance is transferred
to oil and gas properties within development and production assets. No amortisation is charged during the exploration and evaluation phase.
Farm-outs – in the exploration and evaluation phase
The Group does not record any expenditure made by the farmee on its account. It also does not recognise any gain or loss on its exploration
and evaluation farm-out arrangements but re-designates any costs previously capitalised in relation to the whole interest as relating to the
partial interest retained. Any cash consideration received directly from the farmee is credited against costs previously capitalised in relation
to the whole interest with any excess accounted for by the farmor as a gain on disposal.
Property, plant and equipment – oil and gas assets
Oil and gas development and production assets are accumulated generally on a field-by-field or cash-generating unit basis where
infrastructure is shared. This represents expenditure on the construction, installation or completion of infrastructure facilities such as
platforms, pipelines and the drilling of development wells, including E&E expenditures incurred in finding commercial reserves transferred
from intangible E&E assets, as outlined in the intangible asset policy above, which is capitalised as oil and gas properties within
development and production assets.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
144
2. Material accounting policies
continued
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into
operation, the initial estimate of the decommissioning obligation and, for qualifying assets, where relevant, borrowing costs. The purchase
price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset.
An item of development and production expenditure and any significant part initially recognised is derecognised upon disposal or when
no future economic benefits are expected. Any gain or loss arising on derecognition of the asset (calculated as the difference between
the net disposal proceeds and the carrying amount of the asset) is included in the income statement.
Expenditure on major maintenance includes refits, inspections or repairs comprising the cost of replacement assets or parts of assets,
inspection costs and overhaul costs. Where an asset, or part of an asset, that was separately depreciated and is now written off is replaced
and it is probable that future economic benefits associated with the item will flow to the Group, the expenditure is capitalised. All other
day-to-day repairs and maintenance costs are expensed as incurred.
Depreciation, depletion and amortisation (DD&A) of oil and gas assets
All costs relating to a development are accumulated and not depreciated until the commencement of production. Depreciation is provided
generally on a field-by-field or cash-generating unit basis where infrastructure is shared, using the unit of production method by reference
to the ratio of production in the year and the related commercial proven and probable reserves of the field, considering future development
expenditures necessary to bring those reserves into production.
When there is a change in the estimated total recoverable proven and probable reserves of a field, that change is accounted for in the
depreciation charge over the revised remaining proven and probable reserves.
Acquisitions, asset purchases and disposals
Acquisitions of oil and gas properties are accounted for using the acquisition method when the assets acquired, and liabilities assumed
constitute a business.
Transactions involving the purchase of an individual field interest, or a group of field interests, which do not constitute a business, are
treated as asset purchases irrespective of whether the specific transactions involve the transfer of the field interests directly or the transfer
of an incorporated entity. Accordingly, no goodwill and no deferred tax gross up arises, and the consideration is allocated to the assets and
liabilities purchased on an appropriate basis.
Proceeds on disposal are applied to the carrying amount of the specific intangible asset or oil and gas property disposed of and any surplus
is recorded as a gain on disposal in the income statement.
Decommissioning
A provision for decommissioning is recognised in full when the related facilities are installed. The amount recognised is the present value of
the estimated future expenditure. A corresponding amount equivalent to the provision is also recognised as part of the cost of the related oil
and gas property. This is subsequently depreciated as part of the capital costs of the production facilities. Any change in the present value
of the estimated expenditure is dealt with from the start of the financial year as an adjustment to the opening provision and the oil and gas
property. The unwinding of the discount is included as a finance cost.
Non-oil and gas assets
Property, plant and equipment – fixtures and fittings and office equipment
Fixtures and fittings and office equipment are stated at cost less accumulated depreciation and impairment. Depreciation is provided for
on a straight-line basis at rates sufficient to write off the cost of the assets less any residual value over their estimated useful economic lives.
The depreciation periods for the principal categories of assets are as follows:
   
Buildings
Up to 50 years
Fixtures and fittings
Up to 10 years
Office furniture and equipment
Up to 5 years
Intangible assets
Intangible assets principally comprise IT software/licences and carbon allowances. IT software/licences are carried at cost less any
accumulated amortisation. These assets are amortised on a straight-line basis over their useful economic lives of between three and ten
years. Carbon allowances are carried at cost and subject to impairment testing.
Impairment of non-current assets (excluding goodwill)
In accordance with IAS 36 Impairment of Assets, impairment tests are carried out on items of property, plant and equipment and intangible
assets where there is an indicator of impairment, or an indicator identified that a prior year impairment may have reversed or decreased.
Such indications may be based on events or changes in the market environment, or on internal sources of information.
Impairment and reversal indicators
Property, plant and equipment and intangible assets with finite useful lives are only tested for impairment when there is an indication that
they may be impaired. This is generally the result of significant changes to the environment in which the assets are operated or when asset
performance is significantly lower than expected.
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The main impairment indicators used by the Group are described below:
External sources of information:
Significant changes in the economic, technological, political or market environment in which the entity operates
or to which an asset is dedicated
Fall in demand
Changes in commodity prices and exchange rates
Internal sources of information:
Evidence of obsolescence or physical damage
Significantly lower than expected production or cost performance
Reduction in reserves and resources, including as a result of unsuccessful results of drilling operations
Pending expiry of licence or other rights
In respect of capitalised exploration and evaluation costs, lack of planned future activity on the prospect or licence
For reversals, plausible downside sensitivity scenarios are run to test the robustness of the asset carrying values typically
against changes in production and commodity prices
Measurement of recoverable amount
The cash-generating unit (CGU) applied for impairment test purposes is generally the field, except that a number of field interests may
be grouped as a single CGU where the cash inflows of each field are interdependent. The carrying value of each CGU is compared against
the expected recoverable amount of the asset, which is primarily determined based on the fair value less cost of disposal (FVLCD) method,
where the fair value is determined from the estimated present value of the future net cash flows expected to be derived from production
of commercial reserves. Standard valuation techniques are used based on the discount rates that reflect the specific characteristics of
the operating entities concerned; discount rates are determined on a post-tax basis and applied to post-tax cash flows.
Any impairment loss is recorded in the income statement under ‘Impairment of property, plant and equipment’. Impairment losses recorded in relation
to property, plant and equipment may be subsequently reversed if the recoverable amount of the assets subsequently increases above carrying
value. The increased carrying amount of an item of property, plant or equipment attributable to a reversal of an impairment loss may not exceed the
carrying amount that would have been determined (net of depreciation/amortisation) had no impairment loss been recognised in prior periods.
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as assets held for sale if their carrying amounts will be recovered principally
through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are
measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable
to the disposal group, excluding finance costs and income tax expense. The criteria for held for sale classification is regarded as met only
when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Management must
be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification. Actions
required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will
be withdrawn. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as assets held for sale.
Assets and liabilities classified as held for sale are presented separately as current line items in the balance sheet.
Financial assets
The Group uses two criteria to determine the classification of financial assets: the Group’s business model and contractual cash flow
characteristics of the financial assets. Where appropriate the Group identifies three categories of financial assets: amortised cost, fair
value through profit or loss (FVTPL), and fair value through other comprehensive income (FVOCI).
Financial assets held at amortised cost
Financial assets held at amortised cost are initially measured at fair value plus transaction and subsequently measured using the effective
interest rate (EIR) method and are subject to impairment. The EIR amortisation is presented within finance income in the income statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments that are held for the purpose of meeting
short-term cash commitments, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at FVTPL. ECLs are based on the
difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate.
ECLs are recognised in two stages:
12-month ECL: for credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are
provided for credit losses that result from default events (payment, prospective or covenant) that are possible within the next 12 months
Lifetime ECL: for those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss
allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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Annual Report & Accounts 2024
146
2. Material accounting policies
continued
For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs as allowed under IFRS 9 Financial
Instruments. Provision rates are calculated based on estimates including the probability of default by assessing counterparty credit ratings,
as adjusted for forward-looking factors specific to the debtors, the economic environment and the Group’s historical credit loss experience.
Credit impaired financial assets
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt financial assets carried at FVOCI
are credit impaired. A financial asset is ‘credit impaired’ when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Evidence that a financial asset is credit impaired includes the following observable data:
Significant financial difficulty of the borrower or issuer
A breach of contract such as default or past due event
The restructuring of a loan or advance by the Group on terms that the Group would otherwise not consider
Becoming probable that the borrower will enter bankruptcy or other financial reorganisation
The disappearance of an active market for a security because of financial difficulties
Financial liabilities
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised
initially at fair value and, in the case of loans, borrowings and payables, net of directly attributable transaction costs which are capitalised
and amortised over the term of the borrowings. Where borrowings have been fully repaid but the borrowing facility remains, directly
attributable transaction costs that remain unamortised are presented within current and/or non-current assets.
Borrowings and loans
Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance charges, including premiums
payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the income statement using the effective
interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the year in which they arise.
Subordinated notes
Through the acquisition of the Wintershall Dea portfolio, the Group now holds two series of subordinated resettable fixed rate notes
(subordinated notes) in the aggregate principal amount of €1,500 million, which were transferred to Harbour on completion of the
acquisition. The subordinated notes are callable three months prior to the first reset date for the NC2026 series and six months prior
to the first reset date for the NC2029 series, and have no maturity.
Based on their characteristics (mainly no mandatory repayment and no obligation to pay a coupon except under certain circumstances specified
in the documentation of the subordinated notes) and in compliance with IAS 32 Financial Instruments: Presentation, the subordinated notes
are wholly classified as equity. On completing the acquisition, the issued subordinated notes are recognised at fair value, based on market rates
as of the acquisition date. Accrued interest payable to the subordinated notes investors increases equity, whereas the distribution of interest
payments reduces equity.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged, cancelled, or expires. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the income statement.
Derivative financial instruments
The Group uses derivative financial instruments such as forward currency contracts, interest rate swaps, commodity option contracts and
commodity swap arrangements, to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Derivative
financial instruments are initially recognised and subsequently remeasured at fair value. Certain derivative financial instruments are
designated as cash flow hedges in line with the Group’s risk management policies. When derivatives do not qualify for hedge accounting
or are not designated as accounting hedges, changes in the fair value of the instrument are recognised within the income statement.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a
financial liability. Derivatives are not offset in the financial statements unless the Group has both a legally enforceable right and intention
to offset. A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
12 months and it is not due to be realised or settled within 12 months. Other derivatives maturing in less than 12 months and expected
to be realised or settled in less than 12 months are presented as current assets or current liabilities.
Cash flow hedges
The effective portion of gains and losses arising from the remeasurement of derivative financial instruments designated as cash flow hedges
are deferred within other comprehensive income and subsequently transferred to the income statement in the period the hedged transaction
is recognised in the income statement. When a hedging instrument is sold or expires, any cumulative gain or loss previously recognised in
other comprehensive income remains deferred until the hedged item affects profit or loss or is no longer expected to occur. Any gain or loss
STRATEGIC REPORT
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ADDITIONAL INFORMATION
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Annual Report & Accounts 2024
147
relating to the ineffective portion of a cash flow hedge is immediately recognised in the income statement. Hedge ineffectiveness could arise
if volumes of the hedging instruments are greater than the hedged item of production, or where the creditworthiness of the counterparty
is significant and may dominate the transaction and lead to losses.
Fair values
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. It is determined by reference to quoted market prices adjusted for estimated transaction
costs that would be incurred in an actual transaction, or by the use of established estimation techniques such as option pricing models
and estimated discounted values of cash flows.
For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques.
Under IFRS 9 Financial Instruments, embedded derivatives are not separated from a host financial asset, and are classified based
on their contractual terms and the Group’s business model.
Equity
Share capital
Share capital includes the total net proceeds, both nominal and share premium, on the issue of ordinary (voting and non-voting)
and preference shares of the company.
Merger reserve
On 31 March 2021, Harbour Energy plc (formerly Premier Oil plc) acquired Chrysaor Holdings Limited as part of a reverse acquisition. Under
the terms of the merger, Premier legally acquired Chrysaor through the issuance of consideration shares whilst Chrysaor was the acquirer for
accounting purposes, primarily as a result of its ability to appoint the Board of the enlarged group. The merger reserve primarily represented
Premier’s opening balance on the legal reserve plus the fair value of the assets and liabilities acquired by Chrysaor. This was subsequently
reduced following a capital restructuring in 2022.
On 3 September 2024, the company acquisition of the Wintershall Dea assets met the conditions to recognise the difference between the
fair value and nominal value of the shares issues as consideration as merger reserve.
Capital redemption reserve
The capital redemption reserve represents the nominal value of shares transferred following the company’s purchase of them.
Cash flow hedge reserve
The cash flow hedge and cost of hedging reserves represent gains and losses on derivatives classified as effective cash flow hedges. Upon the
designation of option instruments as hedging instruments, the intrinsic and time value components are separated, with only the intrinsic component
being designated as the hedging instrument and the time value component is deferred in other comprehensive income as a ‘cost of hedging’.
Currency translation reserve
This reserve comprises exchange differences arising on consolidation of the Group’s operations with a functional currency other than the US dollar.
Share-based payments
The Group has applied the requirements of IFRS 2 Share-Based Payment. The Group has share-based awards that are equity and cash
settled as defined by IFRS 2. The fair value of the equity-settled awards has been determined at the date of grant of the award allowing
for the effect of any market-based conditions. The fair value determined at the grant date of the equity-settled share-based payments is
expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted
for the effect of non-market based vesting conditions. For cash-settled awards, a liability is recognised for the goods or service acquired.
This is measured initially at the fair value of the liability. The fair value of the liability is subsequently remeasured at each balance sheet date
until the liability is settled, and at the date of settlement, with any changes in fair value recognised in the income statement.
Inventories
All inventories, except for petroleum products, are stated at the lower of cost and net realisable value. The cost of materials is the purchase
cost, determined on weighted average cost basis. Petroleum products and underlift and overlift positions are measured at net realisable
value using an observable year-end oil or gas market price, and are included in other debtors or creditors, respectively.
Leases
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on
a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets which are no more than ten years.
The Group recognises right-of-use assets and lease liabilities on a gross basis and the recovery of lease costs from joint operations’ partners
is recorded as other income.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
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Annual Report & Accounts 2024
148
2. Material accounting policies
continued
Liabilities arising from a lease are initially measured on a present value basis reflecting the net present value of the fixed lease payments and
amounts expected to be payable by the Group assuming leases run to full term. The Group has applied judgement to determine the lease
term for some lease contracts in which it is a lessee that include renewal options. The assessment of whether the Group is reasonably certain
to exercise such options impacts the lease term, which significantly impacts the amount of lease liabilities and right-of-use assets recognised.
The lease payments are discounted at the lease commencement date using the Group’s incremental borrowing rates of between
1.2 per cent and 13.1 per cent, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset
of similar value in a similar economic environment with similar terms and conditions.
To determine the incremental borrowing rate, the Group where possible:
Uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions
since third party financing was received
Makes adjustments specific to the lease, for example term, country, currency and security
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease
liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed
and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over the lease
period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Payments associated with short-term leases and leases of low value assets are recognised on a straight-line basis as an expense in the
income statement. Short-term leases are leases with a lease term of 12 months or less.
For lease arrangements where all partners of a joint operation are considered to share the primary responsibility for lease payments under
a lease contract, the Group recognises its share of the respective right-of-use asset and lease liability. This situation is most common where
the parties of a joint operation co-sign the lease contract.
The Group recognises a gross lease liability for leases entered into on behalf of a joint operation where it has primary responsibility for
making the lease payments. In such instances, if the arrangement between the Group and the joint operation represents a finance sublease,
the Group recognises a net investment in sublease for amounts recoverable from non-operators whilst derecognising the respective portion
of the gross right-of-use asset. The gross lease liability is retained on the balance sheet.
The net investment in sublease is classified as either trade and other receivables or long-term receivables on the balance sheet according
to whether or not the amounts will be recovered within 12 months of the balance sheet date. Finance income is recognised in respect of net
investment in subleases.
Provisions for liabilities
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
The expense relating to any provision is presented in the income statement net of any reimbursement. If the effect of the time value of money
is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risk specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as part of finance costs in the income statement.
The estimated cost of dismantling and restoring the production and related facilities at the end of the economic life of each field is
recognised in full when the related facilities are installed. The amount provided is the present value of the estimated future restoration cost.
A non-current asset is also recognised. Any changes to estimated costs or discount rates are dealt with prospectively.
The Group recognises a provision for the estimated CO
2
emissions costs when actual emissions exceed the emission rights granted and
still held. When actual emissions exceed the amount of emission rights granted, a provision is recognised for the exceeding emission
rights based on the purchase price of allowances concluded in forward contracts or market quotations at the reporting date.
Group retirement benefits
The Group’s various pension plans consist of both defined benefit and defined contribution plans. Payments to defined contribution
retirement benefit plans are charged as an expense as they fall due. Payments made to state-managed retirement benefit schemes are dealt
with as payments to defined contribution plans where the Group’s obligations under the schemes are equivalent to those arising in a defined
contribution retirement benefit plan.
The Group operates a defined benefit pension scheme, which requires contributions to be made to a separately administered fund. The cost
of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at each balance sheet
date. Actuarial gains and losses are recognised immediately in the statement of comprehensive income.
The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as reduced
by the fair value of plan assets. Any asset resulting from this calculation is limited to the present value of available refunds and reductions
in future contributions to the plan.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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Annual Report & Accounts 2024
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The Group participates in a legally independent multi-employer plan which is financed by employer and employee contributions as well as
the return on plan assets. Since sufficient information is not available for this multi-employer plan, the Group accounts for the plan as if it
was a defined contribution plan.
In the case of contribution-based defined benefit pension plans, the Group makes contribution payments to special-purpose funds as well
as to life insurances. These contribution payments are recorded as expenses. Furthermore, for some of the Group’s contribution-based
defined benefit pension plans, benefit obligations are recognised at the fair value of these funds, so far as the assets exceed the
guaranteed minimum benefit amount.
If the assets do not exceed the guaranteed minimum benefit amount, benefit obligations for these contribution-based benefit plans
are recognised in the guaranteed minimum benefit amount.
The defined benefit plans are administered by a separate fund that is legally separated from the acquired Wintershall Dea portfolio.
The trustees of the pension fund are required by law to act in the interest of the fund and of all relevant stakeholders in the plans.
Trade payables
Initial recognition of trade payables is at fair value. Subsequently they are stated at amortised cost.
Taxes
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid
to the taxation authorities. The tax rates and laws used to compute the amount are those that are enacted or substantively enacted
at the reporting date in the countries where the Group operates and generates taxable income.
Current income tax related to items recognised directly in other comprehensive income or equity is recognised in other comprehensive
income or directly in equity, not in the income statement.
Management periodically evaluates positions taken in the tax returns with respect to situations in which tax regulations are subject
to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred taxation is recognised in respect of all temporary differences arising between the tax bases of the assets and liabilities and their
carrying amounts in the financial statements with the following exceptions:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements,
when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax
losses. Deferred income tax assets are recognised only to the extent that it is probable that the taxable profit will be available against which
the deductible temporary difference, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the reporting date.
The carrying amount of the deferred income tax asset is reviewed at each balance sheet date and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. The Group reassesses
any unrecognised deferred tax assets each year taking into account changes in oil and gas prices, the Group’s proven and probable
reserves and resources profile and forecast capital and operating expenditures.
Deferred income tax assets and liabilities are offset only if a legally enforceable right exists to offset current assets against current tax liabilities,
the deferred income tax relates to the same tax authority and that same tax authority permits the Group to make a single net payment.
Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited in other comprehensive
income, in which case the deferred tax is also dealt with in other comprehensive income.
Revenue from contracts with customers
Revenue from contracts with customers is recognised when the Group satisfies a performance obligation by transferring a good or service
to a customer. A good or service is transferred when the customer obtains control of that good or service. Revenue associated with the sale
of crude oil, natural gas and natural gas liquids (NGLs) is measured based on the consideration specified in contracts with customers with
reference to quoted market prices in active markets, adjusted according to specific terms and conditions as applicable according to the
sales contracts. The transfer of control of oil, natural gas, natural gas liquids and other items sold by the Group occurs when title passes at
the point the customer takes physical delivery. The Group principally satisfies its performance obligations at a point in time and the amounts
of revenue recognised relating to performance obligations satisfied over time are not significant.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
150
2. Material accounting policies
continued
Over/underlift
Differences between the production sold and the Group’s share of production result in an overlift or an underlift. Underlift positions are
measured at net realisable value using an observable year-end oil or gas market price. Overlift positions are measured using the sales
price that generated the overlift. Underlift and overlift positions are included in receivables or payables respectively. Movements during
the accounting period are recognised within cost of sales.
Interest income
Interest income is recognised on an accruals basis, by reference to the principal outstanding and at the effective interest rate applicable.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of
time to get ready for its intended use or sale (a qualifying asset) are capitalised as part of the cost of the respective assets. Where the funds
used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable
to relevant general borrowings of the Group during the period. All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
New accounting standards and interpretations
The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after
1 January 2024 (unless otherwise stated). The Group has not early adopted any other standard, interpretation or amendment that
has been issued but is not yet effective.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date
of the pronouncement. New standards, amendments and interpretations not adopted in the current year have not been disclosed
as they are not expected to have a material impact on the Consolidated financial statements.
Classification of Liabilities as Current or Non-current and Non-current Liabilities with Covenants – Amendments to IAS 1
The amendments specify the requirements for classifying liabilities as current or non-current. The amendments clarify:
What is meant by a right to defer settlement
That a right to defer must exist at the end of the reporting period
That classification is unaffected by the likelihood that an entity will exercise its deferral right
That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact
its classification
In addition, a requirement has been added to disclose when a liability arising from a loan agreement is classified as non-current and
the entity’s right to defer settlement is contingent on compliance with future covenants within 12 months.
The amendments had no impact on the Consolidated financial statements.
Lease Liability in a Sale and Leaseback – Amendments to IFRS 16
The amendments to IFRS 16 specify the requirements that a seller-lessee uses in measuring the lease liability arising in a sale and
leaseback transaction, to ensure the seller-lessee does not recognise any amount of the gain or loss that relates to the right of use
it retains. The amendments had no impact on the Consolidated financial statements.
Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7
The amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures clarify the characteristics of supplier
finance arrangements and require additional disclosure of such arrangements. The disclosure requirements in the amendments are
intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity’s liabilities,
cash flows and exposure to liquidity risk.
The disclosure requirements in the amendments provide information about the impact of supplier finance arrangements on liabilities and
cash flows, including terms and conditions of those arrangements, quantitative information on liabilities related to those arrangements as at
the beginning and end of the reporting period and the type and effect of non-cash changes in the carrying amounts of those arrangements.
The amendments had no impact on the Consolidated financial statements.
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FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
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151
3. Segment information
The chief operating decision maker, who is responsible for allocating resources and assessing performance of the Group’s business
segments, has been identified as the Chief Executive Officer.
Prior to the acquisition of substantially all of Wintershall Dea’s upstream oil and gas assets, the Group’s activities consisted of one class
of business being the acquisition, exploration, development and production of oil and gas reserves and related activities, and were split
geographically and managed in two regions, namely ‘North Sea’ and ‘International’. The North Sea segment included the UK and Norwegian
continental shelves, and the ‘International’ segment included Indonesia, Vietnam and Mexico.
The operating segments have been modified following the acquisition of the Wintershall Dea portfolio and changes in the Group’s structure
effective from September 2024. The operating segments are now divided geographically and managed across nine Business Units: namely
Norway, UK, Germany, Mexico, Argentina, North Africa, Southeast Asia, CCS and Corporate. The CCS segment includes Denmark.
Information on major customers can be found in note 4.
   
                     
Adjustments
 
           
North
Southeast
   
Total
and
 
Year ended
Norway
UK
Germany
Mexico
Argentina
Africa
Asia
CCS
Corporate
segments
eliminations
Consolidated
31 December 2024
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
Revenue and other income
                       
External customers
                       
– Crude oil sales
343
1,755
158
55
23
10
141
393
2,878
2,878
– Gas sales
86
1,143
9
3
111
63
115
1,406
2,936
2,936
– Other revenue
90
195
1
6
40
12
344
344
Other income
33
4
2
7
6
1
15
68
68
Inter-segment
946
791
74
68
1,879
(1,879)
Total revenue and
                       
other income
1,465
3,917
246
60
147
119
257
1,894
8,105
(1,879)
6,226
Cost of operations
(520)
(2,699)
(243)
(37)
(120)
(58)
(172)
(6)
(1,631)
(5,486)
1,873
(3,613)
(Reversal)/impairment of
                       
property, plant and
                       
equipment
14
(323)
(26)
(15)
(5)
3
(352)
(352)
Impairment of
                       
right-of-use asset
(20)
(20)
(20)
Impairment of goodwill
Exploration and
                       
evaluation expenses and
                       
new ventures
(22)
(4)
(40)
(2)
(68)
(68)
Exploration costs
                       
written-off
(76)
(81)
(2)
(14)
(173)
(173)
General and
                       
administrative expenses
(24)
(76)
(19)
(6)
(9)
(7)
(7)
(1)
(203)
(352)
(352)
Segment operating
                       
profit/(loss)
837
714
(42)
17
18
52
49
(52)
61
1,654
(6)
1,648
Finance income
                     
173
Finance expenses
                     
(602)
Income tax expense
                     
(1,312)
Loss for the year
                     
(93)
Total assets
9,434
7,306
3,042
2,420
4,488
917
919
18
1,777
30,321
30,321
Total liabilities
(6,622)
(6,936)
(1,965)
(482)
(1,292)
(165)
(454)
(108)
(6,046) (24,070)
(24,070)
Total capital additions
374
698
59
110
61
46
93
33
70
1,544
1,544
Total depreciation,
                       
depletion and
                       
amortisation
293
1,115
146
10
58
16
78
29
1,745
1,745
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
152
3. Segment information
continued
   
                     
Adjustments
 
           
North
Southeast
   
Total
and
 
Year ended
Norway
UK
Germany
Mexico
Argentina
Africa
Asia
CCS
Corporate
segments
eliminations
Consolidated
31 December 2023
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
$ million
Revenue and other income
                       
External customers
                       
– Crude oil sales
1,980
106
2,086
2,086
– Gas sales
1,272
131
12
1,415
1,415
– Other revenue
214
214
214
Other income
35
1
36
36
Inter-segment
28
28
(28)
Total revenue and
                       
other income
3,529
237
13
3,779
(28)
3,751
Cost of operations
(2,255)
(149)
(2,404)
28
(2,376)
Impairment of property,
                       
plant and equipment
(172)
(4)
(176)
(176)
Impairment of
                       
right-of-use asset
Impairment of goodwill
(25)
(25)
(25)
Exploration and evaluation
                       
expenses and new
                       
ventures
(6)
(1)
(29)
(36)
(36)
Exploration costs
                       
written-off
(27)
(11)
(13)
(6)
(57)
(57)
General and
                       
administrative expenses
1
(46)
(4)
(100)
(149)
(149)
Segment operating
                       
profit/(loss)
(32)
1,044
(13)
53
(29)
(91)
932
932
Finance income
                     
104
Finance expenses
                     
(420)
Income tax expense
                     
(571)
Profit for the year
                     
45
Total assets
73
6,083
360
905
2,495
9,916
9,916
Total liabilities
(34)
(5,818)
(49)
(483)
(1,979)
(8,363)
(8,363)
Total capital additions
24
575
44
67
11
721
721
Total depreciation,
                       
depletion and
                       
amortisation
1
1,352
80
16
1,449
1,449
4. Revenue from contracts with customers and other income
   
 
2024
2023
 
$ million
$ million
Type of goods
   
Crude oil sales
2,878
2,086
Gas sales
2,936
1,415
Condensate sales
283
179
Total revenue from contracts with customers
1
6,097
3,680
Tariff income
32
30
Other revenue
29
5
Total revenue from production activities
6,158
3,715
Other income
2
68
36
Total revenue and other income
6,226
3,751
1
Revenues from contracts with customers of $6,115 million (2023: $4,591 million) include crude oil sales of $2,846 million (2023: $2,179 million) and gas sales of $2,986 million
(2023: $2,233 million). This was prior to realised hedging gains in the year of $32 million (2023: $93 million, hedging loss) on crude oil and realised hedging losses in the year of
$50 million (2023: $818 million) on gas sales.
2
Other income mainly represents partner recoveries related to lease obligations and government subsidies in Argentina. Other income in 2023 includes a receipt related to the Viking
CCS Development Agreement that was signed in March 2023.
Approximately 54 per cent (2023: 88 per cent) of the revenues were attributable to sales to energy trading companies of the Shell group.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
153
5. Operating profit
   
     
2023
   
2024
As restated
 
Note
$ million
$ million
Cost of operations
     
Production, insurance and transportation costs
 
1,612
1,171
Commodity purchases
 
28
12
Royalties
 
47
4
Impairment of receivables
 
21
Depreciation of oil and gas assets
12
1,516
1,206
Depreciation of right-of-use oil and gas assets
13
269
235
Capitalisation of IFRS 16 lease depreciation on oil and gas assets
13
(81)
(27)
Movement in over/underlift balances and hydrocarbon inventories
 
201
(225)
Total cost of operations
 
3,613
2,376
Impairment expense of oil and gas property, plant and equipment
12
178
70
Net impairment loss due to increase in decommissioning provisions on oil and gas tangible assets
12
174
106
Impairment of goodwill
10
25
Impairment of right of use asset
13
20
Exploration costs written-off
1
11
173
57
Exploration and evaluation expenditure and new ventures
1
 
68
36
General and administrative expenses
     
Depreciation of right-of-use non-oil and gas assets
13
16
9
Depreciation of non-oil and gas assets
12
6
3
Amortisation of non-oil and gas intangible assets
11
19
23
Acquisition-related transaction costs
 
119
33
Other administrative costs
2
 
192
81
Total general and administrative expenses
2,5
 
352
149
Auditor’s remuneration
     
Audit fees
     
Fees payable to the company’s auditor for the company’s Annual Report
 
6
3
Audit of the company’s subsidiaries pursuant to legislation
 
1
1
Non-audit fees
3
     
Other services pursuant to legislation – interim review
 
Other services
4
 
2
1
1
During the year, the Group expensed $241 million (2023: $93 million) of exploration and appraisal activities. This covers exploration write-off expense of $173 million (2023: $57 million)
including write-off of costs associated with projects in our UK business unit ($79 million) and licence relinquishments in Norway ($64 million), and $40 million (2023: $29 million) costs
associated with energy transition projects.
2
Other administrative costs in 2024 include consultancy and business development costs of $119 million (2023: $33 million), mainly related to the acquisition of the Wintershall Dea
asset portfolio which completed in September 2024.
3
The company has a policy on the provision of non-audit services by the auditor which is aimed at ensuring their continued independence. This policy is available on the Group’s website.
The use of the external auditor for services relating to accounting systems or financial statement preparations is not permitted, as are various other services that could give rise to
conflicts of interest or other threats to the auditor’s objectivity that cannot be reduced to an acceptable level by applying safeguards.
4
Other non-audit services in 2024 primarily relate to transaction related activities including the Wintershall Dea acquisition.
5
Expenses related to both short-term and low value lease arrangements are considered to be immaterial for reporting purposes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
154
6. Staff costs
   
 
2024
2023
 
$ million
$ million
Wages and salaries and other staff costs
428
325
Social security costs
46
25
Pension costs
35
29
Total staff costs
509
379
   
 
2024
2023
Average annual number of employees employed by the Group worldwide was:
Number
Number
Offshore based
545
534
Onshore and administration
1,614
1,271
Total staff
2,159
1,805
During the period September to December 2024, following the acquisition of the Wintershall Dea portfolio, the Group employed an average
of 3,019 employees.
Staff costs above are recharged to joint venture partners where applicable, or are capitalised to the extent that they are directly attributable
to capital or decommissioning projects. The above costs include share-based payments as disclosed in note 27.
The Group operates defined contribution and benefit pension schemes for which further details are provided in note 28.
7. Finance income and finance expenses
   
   
2024
2023
 
Note
$ million
$ million
Finance income
     
Bank interest
 
37
19
Other interest and finance gains
 
16
6
Lease finance income
 
1
2
Realised gains on foreign exchange forward contracts
 
9
Unrealised gains on derivatives
1
 
68
Income from investments
 
1
Foreign exchange gains
 
118
Total finance income
 
173
104
Finance expenses
     
Interest payable on reserve based lending facility
 
1
15
Interest payable on revolving credit facility
 
10
Interest payable on bridge loan facility
 
8
Interest payable on bonds
 
59
27
Other interest and finance expenses
 
10
17
Lease interest
13
53
51
Unrealised losses on derivatives
1
 
43
Realised losses on foreign exchange forward contracts
 
71
Finance expense on deferred revenue
20
5
4
Foreign exchange losses
 
57
Bank and financing fees
2
 
139
100
Unwinding of discount on decommissioning and other provisions
21
221
156
   
620
427
Finance costs capitalised during the year
3
 
(18)
(7)
Total finance expense
 
602
420
1
Losses on derivatives include mark to market losses on foreign currency derivatives of $30 million (2023: $nil), derivative ineffectiveness losses of $8 million (2023: $nil) and $5 million
related to changes in the fair value of an embedded derivative within one of the Group’s gas contracts (2023: $68 million gain).
2
Bank and financing fees include an amount of $102 million (2023: $48 million) relating to the amortisation of arrangement fees and related costs capitalised against the Group’s
long-term borrowings (note 22). This primarily relates to the expensing of previously capitalised fees in respect of the Group’s reserve based lending (RBL) facility of $61 million at
the end of 2023 which was replaced by the new revolving credit facility (RCF) facility as part of the acquisition of the Wintershall Dea portfolio.
3
The amount of finance costs capitalised was determined by applying the weighted average rate of finance costs applicable to the borrowings of the Group of 4.5 per cent to the
expenditures on the qualifying assets (2023: 6.0 per cent).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
155
8. Income tax
The major components of income tax expense are:
   
   
2023
 
2024
As restated
 
$ million
$ million
Current income tax expense
   
Charge for the year
1,413
655
Adjustments in respect of prior years
2
22
Total current income tax expense
1,415
677
Deferred tax credit
   
Origination and reversal of temporary differences in current year
(168)
(86)
Impact of changes in tax rates
1
77
Adjustments in respect of prior years
(12)
(20)
Total deferred tax credit
(103)
(106)
Total tax expense reported in the income statement
1,312
571
The tax (credit)/expense in the statement of comprehensive income is as follows:
   
Tax (credit)/expense on cash flow hedges
(379)
2,376
Tax credit on cash actuarial gains and losses
(4)
Total tax (credit)/expense reported in the statement of comprehensive income
(383)
2,376
1
The amounts for 2024 comprise the impact of the increase in Energy Profits Levy in the UK business unit from 35 per cent to 38 per cent from 1 November 2024.
Reconciliation of tax expense and the accounting profit before taxation at the Group’s statutory tax rate is as follows:
   
   
2023
 
2024
As restated
 
$ million
$ million
Profit before income tax
1,219
616
At the Group’s statutory tax rate of 78 per cent (2023: 75 per cent)
951
462
Effects of:
   
Expenses not deductible for tax purposes
59
103
Adjustments in respect of prior years
(10)
2
Remeasurement of deferred tax
53
13
Deferred Energy Profits Levy change in rate
77
Impact of different tax rates
282
73
Allowances and other tax uplifts
(113)
(82)
Future dividends from investments in subsidiaries, branches and associates
(11)
Other
24
Total tax expense reported in the consolidated income statement at the effective tax rate of 108 per cent
   
(2023: 93 per cent, restated)
1,312
571
The tax expense reconciliation has been prepared based on the statutory tax rate of 78 per cent applicable to oil and gas production in the
UK and Norway, the two most significant jurisdictions of operation for the Group. Management believes that using this rate provides the most
meaningful comparison between the expected tax expense, based on accounting profit, and the actual tax expense recognised. In 2023, the
tax expense was prepared based on the statutory rate of taxation of 75 per cent applying to UK oil and gas production because the majority
of the Group’s profit was generated in the UK Continental Shelf.
The effective tax rate for the year is 108 per cent, compared to 93 per cent for 2023 (restated).
The effective tax rate of 108 per cent is significantly higher than the statutory rate of 78 per cent for the Group, mainly due to several
UK-specific exceptional items impacting the UK tax expense. These items, resulting from the application of Energy Profits Levy (EPL), create
tax rate differences reflected in the income statement. Notably, the increase in the UK asset retirement obligation raised the effective tax
rate by 15 per cent as there is no tax relief available against EPL for expenditure on abandonment. Additionally, exploration write-offs and
impairments of tangible assets in the UK, which carried blended deferred tax liabilities up to the enacted EPL sunset clause date of
31 March 2028, increased the effective tax rate by another 4 per cent. Finally, the EPL rate change from 35 per cent to 38 per cent added
6 per cent to the effective tax rate. Overall, these EPL-related adjustments resulted in an additional 25 per cent increase in the Group’s
effective tax rate.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
156
8. Income tax
continued
The UK and Norway are expected to remain the principal jurisdictions where profits will be earned, so their statutory tax rates for oil
and gas production operations are anticipated to continue as the primary factors influencing the Group’s future tax expense.
Deferred tax
The principal components of deferred tax are set out in the following tables:
   
     
2023
   
2024
As restated
 
Note
$ million
$ million
Deferred tax assets
 
130
7
Deferred tax liabilities
 
(6,240)
(1,297)
   
(6,110)
(1,290)
Reclassification of deferred tax liabilities directly associated with assets held for sale
18
19
Total deferred tax
 
(6,091)
(1,290)
The presentation above takes into account the offsetting of deferred tax assets and deferred tax liabilities within the same tax jurisdiction
(where this is permitted). The overall deferred tax balance in a jurisdiction determines if the deferred tax related to that jurisdiction is
disclosed within deferred tax assets or deferred tax liabilities.
The origination of and reversal of temporary differences are, as shown in the next table, related primarily to movements in the carrying amounts
and tax base values of expenditure and the timing of when these items are charged and/or credited against accounting and taxable profit.
   
 
Accelerated
           
 
capital
   
Fair value of
     
 
allowances
Decommissioning
Losses
derivatives
Other
1
Overseas
Total
 
$ million
$ million
$ million
$ million
$ million
$ million
$ million
As at 1 January 2023
(3,396)
1,565
569
2,452
(3)
(178)
1,009
Deferred tax credit/(expense)
546
(25)
(388)
(61)
22
18
112
Comprehensive income
(2,376)
1
(2,375)
Foreign exchange
(51)
34
(9)
1
(5)
(30)
As at 31 December 2023
(2,901)
1,574
181
6
21
(165)
(1,284)
Restated
(6)
(6)
As at 31 December 2023 as restated
(2,901)
1,574
181
6
21
(171)
(1,290)
Deferred tax (expense)/credit
(44)
257
(114)
(38)
42
103
Comprehensive income
380
4
384
Other reserves
2
(1)
(1)
Additions from business combinations
(6,509)
971
201
(14)
(2)
(5,353)
Reclassifications
3,4
(221)
7
28
 
15
171
Foreign exchange
75
(18)
(8)
2
(4)
47
As at 31 December 2024
(9,600)
2,791
288
336
75
(6,110)
1
Includes deferred tax movements related to investment allowances, share-based payments and pensions.
2
Movement in other reserves relates to the element of deferred tax on UK share-based payments taken to profit and loss reserves.
3
Items classified as overseas balances in 2023 have been reclassified into specific deferred tax categories.
4
Balances related to UK investment allowances ($12 million) have been reclassified from accelerated capital allowances to other.
The Group’s deferred tax assets are recognised to the extent that taxable profits are expected to arise against which the tax assets can
be utilised. The Group assessed the recoverability of tax losses and allowances using corporate assumptions which are consistent with the
Group’s impairment assessment. Based on those assumptions, the Group expects to fully utilise its recognised tax losses and allowances.
The recovery of the Group’s UK decommissioning deferred tax asset is additionally supported by the ability to carry back decommissioning
tax losses and set these against ring fence taxable profits of prior periods.
In October 2024, the UK Government announced changes to the EPL, including an increase in the rate from 35 per cent to 38 per cent, the
removal of the main EPL investment allowance and an extension of the EPL to 31 March 2030. The three per cent increase in the rate and
the removal of the main EPL investment allowance were substantively enacted at the balance sheet date and have effect from 1 November
2024. As a result, the current accounting period reflects an additional deferred tax expense of $77 million, based on the currently enacted
expiration date of the EPL of 31 March 2028 and the remeasurement of temporary differences expected to reverse within this period.
The extension of the EPL to 31 March 2030 was substantively enacted on 3 March 2025 and is therefore not reflected in the financial
statements as at 31 December 2024. This impact will be included in the financial statements for the following period. If the extension had
been in place at the balance sheet date, an additional deferred tax expense of $306 million would have been recognised in the current
financial statements.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
157
In the UK, ring fence tax losses cannot be offset against profits subject to EPL nor are deductions allowed for decommissioning related expenditure.
Consequently, any deferred tax assets representing future decommissioning deductions or ring fence tax losses are unaffected by the EPL. The primary
impact of the EPL is on the deferred tax liability associated with accelerated capital allowances. The closing deferred tax liability for the period is $6,110
million (2023: $1,290 million), of which $877 million (2023: $1,014 million) relates to deferred tax liabilities arising from the impact of the EPL.
Consistent with other sensitivity analyses undertaken, we have assessed the impact on the recoverability of deferred tax assets based on a
decrease of 10 per cent to the Harbour scenario average crude price curves. While there would generally be no material impacts, tax losses
in Mexico are particularly sensitive to the timing of profits as they expire within a 10-year period once generated. Under this scenario, the
deferred tax assets currently recognised for Mexican tax losses would decrease by around $50 million.
Unrecognised tax losses and allowances
Deferred tax assets are recognised for tax loss carry forwards, tax allowances and other deductible temporary differences to the extent
that it is probable the associated tax benefits will be realised through offsetting future taxable profits or by carrying losses back to prior
periods’ profits. At the end of the accounting period, the Group had not recognised deferred tax assets for tax losses, allowances and other
deductible temporary differences amounting to approximately $2,743 million (2023: $1,290 million). These other deductible temporary
differences include unclaimed tax depreciation, unrealised losses on non-commodity derivatives and decommissioning related provisions.
   
 
2024
2023
 
$ million
$ million
Tax losses by expiry date
   
Expiring within 5 years
477
24
Expiring within 6-10 years
240
13
No expiration
1,621
1,115
 
2,338
1,152
Other deductible temporary differences and allowances
405
138
Total unrecognised tax losses and allowances
2,743
1,290
No deferred tax liabilities were recognised for temporary differences associated with investments in subsidiaries, branches and associates
of approximately $293 million (2023: $nil) because the Group is in a position to control the timing of the reversal of the temporary
differences and it is probable that such differences will not reverse in the foreseeable future.
Global minimum corporation tax rate – Pillar Two requirements
The legislation implementing the Organisation for Economic Co-operation and Development’s (OECD) proposals for a global minimum
corporation tax rate (Pillar Two) was substantively enacted into UK law on 20 June 2023. The rules became effective from 1 January 2024.
The Group has applied the mandatory exception in IAS 12 to recognising and disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes.
The Group has performed an assessment of its potential exposure to Pillar Two income taxes for periods from 1 January 2024. The assessment
of the potential exposure is based on the most recent tax filings, country-by-country reporting and financial statements for the constituent
entities in the Group. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are
above 15 per cent and the transitional safe harbour relief is expected to apply. On this basis, the Group does not expect a material exposure
to Pillar Two income taxes in any jurisdictions.
Uncertain tax positions
The Group considers an uncertain tax position to exist when it believes that the amount of profit subject to tax in the future may exceed
the amount initially reflected in the Group’s tax returns. The Group applies IFRIC 23 Uncertainty over Income Tax Treatments in relation to
uncertain tax positions. When management judges that an outflow of funds is probable and a reliable estimate of the dispute can be made,
a provision is recognised for the best estimate of the most likely liability.
In estimating any such liability, the Group adopts a risk-based approach, considering the specific circumstances of each dispute. This is
based on management’s interpretation of tax law and, where appropriate, is supported by independent specialist advice. These estimates
are inherently judgemental and can change significantly over time as disputes progress and new facts emerge.
Provisions are reviewed continuously. However, the resolution of tax issues may take a long time to conclude, and there is a possibility
that the amounts ultimately paid could differ from the amounts initially provided.
In 2023, an uncertain tax position was identified in certain UK subsidiaries relating to the timing of the taxation of fair value movements
and realised gains and losses on hedges entered into to manage commodity price risk. On the strength of independent advice, management
considers that there is no expectation of a net additional outflow of funds. As such no additional liability has been recognised in the
consolidated financial statements as at 31 December 2024. However, a contingent liability exists as the UK tax authorities could take an
alternative view on whether the fair value movements on the hedged instruments are disregarded for tax purposes. While not considered
a likely outcome, if the UK tax authorities were to disagree and successfully challenge the position, a possible liability currently estimated
not to exceed $130 million could arise because of the differences in tax rates across the periods in question.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
158
9. (Loss)/earnings per share (EPS)
Basic EPS is calculated by dividing the profit after tax attributable to ordinary shareholders of the Group by the weighted average number
of ordinary shares in issue during the year.
Diluted EPS is calculated by dividing the profit after tax attributable to ordinary shareholders by the weighted average number of ordinary
share in issue during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
The following table reflects the income and share data used in the basic and diluted EPS calculations:
   
   
2023
 
2024
As restated
(Loss)/earnings for the year ($ millions)
   
Earnings for the purpose of basic earnings per share
(108)
45
Effect of dilutive potential ordinary shares
(Loss)/earnings for the purpose of diluted earnings per share
(108)
45
Number of ordinary shares (millions)
   
Weighted average number of ordinary shares (voting) for the purpose of basic earnings per share
990
804
Weighted average number of ordinary shares (non-voting) for the purpose of basic earnings per share
93
Weighted average number of ordinary shares (voting) for the purpose of diluted earnings per share
1
990
806
Weighted average number of ordinary shares (non-voting) for the purpose of diluted earnings per share
93
(Loss)/earnings per share ($ cents)
   
Basic:
   
Ordinary shares voting
(10)
6
Ordinary shares non-voting
(11)
Diluted:
   
Ordinary shares voting
(10)
6
Ordinary shares non-voting
(11)
1
2023 excludes certain share options outstanding at 31 December 2023 as their option price was greater than market price.
10. Goodwill
Goodwill represents the difference between the aggregate of the fair value of purchase consideration transferred at the acquisition date
and the fair value of the identifiable assets.
   
   
2024
2023
Cost and net book value
Note
$ million
$ million
At 1 January
 
1,302
1,327
Additions from business combinations
14
3,845
Impairment charge
 
(25)
At 31 December
 
5,147
1,302
Goodwill is allocated as follows to the operating segments:
   
 
2024
2023
Cost and net book value
$ million
$ million
Norway
2,651
UK
1,278
1,278
Germany
401
Mexico
199
Argentina
594
Southeast Asia
24
24
At 31 December
5,147
1,302
The goodwill balance consists of balances arising from the acquisition of Wintershall Dea’s upstream oil and gas assets on 3 September
2024, the completion of the all-share merger between Premier Oil plc and Chrysaor Holdings Limited in March 2021, Chrysaor Holdings
Limited’s acquisition of the ConocoPhillips UK business, and the UK North Sea assets from Shell, which completed on 30 September 2019
and 1 November 2017, respectively.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
159
Impairment testing of goodwill
In accordance with IAS 36 Impairment of Assets, goodwill is reviewed for impairment at the year-end, or more frequently, if there are
indications that goodwill might be impaired.
The goodwill recognised in business combinations is allocated to operating segments for the purpose of impairment testing. The carrying value
of goodwill is tested at the operating segment level against the aggregated headroom arising from the impairment testing of corresponding
segment assets. The carrying value of the assets is the sum of tangible assets, intangible assets and goodwill as of the assessment date.
In the asset impairment test performed, and where applicable, the carrying value is adjusted by deferred tax which protects goodwill from
an immediate impairment. When the deferred tax liabilities from the acquisitions naturally unwind and decrease, as a result of depreciation
through production, more goodwill is exposed to impairment. This may lead to future impairment charges even though other assumptions
remain stable.
At the year-end, the Group tested for impairment in accordance with the accounting policy and no goodwill impairment was recognised
(2023: $25 million). Goodwill will ultimately be impaired to the income statement as the relevant operating segment businesses mature.
Determining recoverable amount
The recoverable amounts of the CGU and fields have been determined on a fair value less costs to sell basis. The key assumptions used
in determining the fair value are often subjective, such as the future long-term oil and gas price assumption, or the operational performance
of the assets. Discounted cash flow models comprising asset-by-asset life of field projections using Level 3 inputs (based on the IFRS 13 fair
value hierarchy) have been used to determine the recoverable amounts.
The cash flows have been modelled on a post-tax and post-decommissioning basis, inflated at 2.5 per cent per annum from 1 January 2028,
and discounted at the Group’s post-tax discount rate of between 8.75 per cent and 14.5 per cent (2023: 9.0 – 12.4 per cent post-tax).
Risks specific to assets within the CGU are reflected within the cash flow forecasts.
Key assumptions used in calculations
Assumptions involved in impairment measurement include estimates of commercial reserves and production volumes, future oil and gas
prices, discount rates and the level and timing of expenditures, all of which are inherently uncertain.
Commodity and carbon prices
Management’s commodity price curve assumptions are benchmarked against a range of external forward price curves on a regular basis.
The first three years reflect the market forward prices curves transitioning to a long-term price thereafter. The long-term commodity prices
and carbon prices are shown in note 2 of the financial statements on page 138.
Production volumes and oil and gas reserves
Based on life of field production profiles for each asset within the CGUs. Proven and probable reserves are estimates of the amount
of oil and gas that can be economically extracted from the Group’s oil and gas assets. The Group estimates its reserves using standard
recognised evaluation techniques and they are assessed at least annually by management and by an independent consultant. Proven
and probable reserves are determined using estimates of oil and gas in place, recovery factors and future commodity prices.
Costs
Operating expenditure, capital expenditure and decommissioning costs, which have been inflated at 2.5 per cent per annum from
1 January 2028, are derived from the Group’s business plan.
Discount rates
Represent management’s estimate of the Group’s country-based weighted average cost of capital (WACC), considering both debt and
equity. The cost of equity is derived from an expected return on investment by the Group’s investors, and the cost of debt is based on
its interest-bearing borrowings. Segment-specific risk is incorporated by applying a beta factor based on publicly available market data.
The discount rate is based on an assessment of a relevant peer group’s post-tax WACC.
Foreign exchange rates
Based on management’s long-term rate assumptions, with reference to a range of underlying economic indicators.
Sensitivity to changes in assumptions used in calculations
The Group has run sensitivities on its long-term commodity price assumptions, which have been based on long-range forecasts from external
financial analysts, using alternate long-term price assumptions, and discount rates. These are considered to be reasonably possible changes
for the purposes of sensitivity analysis. As shown in note 2 of the financial statements, the sensitivity analysis on commodity prices reflecting
a 10 per cent reduction in the long-term oil and gas price deck applied in the impairment test would result in $81 million goodwill
impairment. A 1 per cent increase in the discount rate would result in an impairment to goodwill of $10 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
160
11. Other intangible assets
   
   
Oil and gas
Non-oil and
Carbon
 
   
assets
gas assets
1
allowances
Total
 
Note
$ million
$ million
$ million
$ million
Cost
         
At 1 January 2023
 
817
137
954
Additions during the year
 
210
20
230
Transfers from property, plant and equipment
12
7
7
Reclassification from trade and other receivables
 
86
86
Increase in decommissioning asset
21
4
4
Exploration write-off
 
(57)
(57)
Currency translation adjustment
 
42
8
50
At 31 December 2023
 
1,016
172
86
1,274
Additions during the year
 
398
51
36
485
Additions from business combinations and joint arrangements
 
4,407
2
4,409
Transfers from property, plant and equipment
12
(39)
1
(38)
Increase in decommissioning asset
21
12
12
Exploration write-off
2
 
(173)
(173)
Utilised
 
(54)
(54)
Disposals
 
(42)
(42)
Currency translation adjustment
 
(76)
(3)
(3)
(82)
At 31 December 2024
 
5,545
181
65
5,791
Amortisation
         
At 1 January 2023
 
74
74
Charge for the year
 
23
23
Currency translation adjustment
 
5
5
At 31 December 2023
 
102
102
Charge for the year
 
19
19
Disposals
 
(42)
(42)
Currency translation adjustment
 
(2)
(2)
At 31 December 2024
 
77
77
Net book value
         
At 31 December 2023
 
1,016
70
86
1,172
At 31 December 2024
 
5,545
104
65
5,714
1
Non-oil and gas assets relate to Group IT software of $71 million and carbon capture and storage activities, mainly related to the Viking CCS project of $33 million.
2
The exploration write-off of $173 million (2023: $57 million) includes the write off of costs associated with projects in the UK ($79 million) and licence relinquishments in Norway ($64 million).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
161
12. Property, plant and equipment
   
     
Fixtures and
   
   
Oil and gas
fittings & office
Land and
 
   
assets
equipment
buildings
1
Total
 
Note
$ million
$ million
$ million
$ million
Cost
         
At 1 January 2023
 
11,436
38
11,474
Additions
 
482
9
491
Transfers to intangible assets
11
(7)
(7)
Reclassification of asset held for sale
 
(198)
(198)
Decrease in decommissioning asset
21
(22)
(22)
Currency translation adjustment
 
159
2
161
At 31 December 2023
 
11,857
42
11,899
Restated
 
198
198
At 31 December 20223 as restated
 
12,055
42
12,097
Additions
2
 
1,037
21
1
1,059
Additions from business combinations and joint
         
arrangements
14
9,951
20
40
10,011
Transfers from intangible assets
11
39
(1)
38
Reclassification of asset held for sale
18
(198)
(198)
Increase in decommissioning asset
3
21
760
760
Disposals
 
(1)
(24)
(25)
Currency translation adjustment
 
(258)
(2)
(2)
(262)
At 31 December 2024
 
23,385
57
38
23,480
Accumulated depreciation
         
At 1 January 2023
 
5,760
24
5,784
Charge for the year
 
1,192
3
1,195
Impairment charge
 
214
214
Reclassification of asset held for sale
 
(103)
(103)
Currency translation adjustment
 
91
1
92
At 31 December 2023
 
7,154
28
7,182
Restated
 
79
79
At 31 December 2023 as restated
 
7,233
28
7,261
Charge for the year
 
1,516
5
1
1,522
Impairment charge
 
352
352
Reclassification of asset held for sale
18
(124)
(124)
Disposals
 
(1)
(24)
(25)
Currency translation adjustment
 
(49)
(49)
At 31 December 2024
 
8,927
9
1
8,937
Net book value:
         
At 31 December 2023 as restated
 
4,822
14
4,836
At 31 December 2024
 
14,458
48
37
14,543
1
Land and buildings include investment property of $2.6 million (2023: $nil).
2
Included within property, plant and equipment additions of $1,059 million (2023: $491 million) are associated cash flows of $884 million (2023: $496 million) and non-cash flow
movements of $175 million (2023: $5 million) represented by a $93 million increase in capital accruals (2023: $30 million decrease), $64 million of capitalised lease depreciation
(2023: $18 million) and $18 million of capitalised interest (2023: $7 million).
3
An increase in the decommissioning assets of $760 million (2023: $22 million) was made during the year as a result of both an update to the decommissioning estimates and new
obligations (note 21).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
162
12. Property, plant and equipment
continued
During the year, the Group recognised a pre-tax impairment charge of $352 million (post-tax $185 million) (2023: $176 million; post-tax
$83 million, as restated). This comprised a pre-tax impairment charge representing a write-down of property, plant and equipment assets
of $163 million (2023: $70 million) across three fields in the UK, mainly driven by further changes to the UK Energy Profits Levy and
changes in life of field outlook, in addition to a fair value impairment on the Vietnam held for sale asset of $15 million. A pre-tax impairment
charge of $174 million (2023: $106 million) was also recorded in respect of revisions to decommissioning estimates on late-life assets,
and non-producing assets with no remaining net book value (see note 21).
In 2023, a net pre-tax impairment charge of $176 million was recognised as a result of impairments on two UK CGUs of $70 million, one
driven by a reduction in the gas price forward curve and the other by a revised decommissioning cost profile, and a pre-tax impairment
charge of $106 million in respect of revisions to decommissioning estimates on the Group’s non-producing assets with no remaining net
book value.
Key assumptions used in calculations
Assumptions used in impairment measurement include estimates of commercial reserves and production volumes, future oil and gas prices,
discount rates and the level and timing of expenditures, all of which are inherently uncertain.
Commodity and carbon prices
The Group uses the fair value less cost of disposal method (FVLCD) to calculate the recoverable amount of the cash-generating units (CGU)
consistent with a level 3 fair value measurement (see note 23). In determining the recoverable value, appropriate discounted-cash-flow
valuation models were used, incorporating market-based assumptions. Management’s commodity price curve assumptions are benchmarked
against a range of external forward price curves on a regular basis. Individual field price differentials are then applied. The first three years
reflect benchmarked consensus and market forward price curves transitioning to a long-term price from 2028, thereafter inflated at 2.5 per
cent per annum. The long-term commodity prices used were $78 per barrel for Brent crude, 80 pence per therm for UK NBP gas and the
European gas price at 2 per cent higher than UK NBP.
Production volumes and oil and gas reserves
Production volumes are based on life of field production profiles for each asset within the CGU. Proven and probable reserves are estimates
of the amount of oil and gas that can be economically extracted from the Group’s oil and gas assets. The Group estimates its reserves using
standard recognised evaluation techniques, assessed at least annually by management. Proven and probable reserves are determined
using estimates of oil and gas in place, recovery factors and future commodity prices.
Costs
Operating expenditure, capital investment and decommissioning costs are derived from the Group’s business plan.
Discount rates
The discount rate reflects management’s estimate of the Group’s country-based weighted average cost of capital (WACC).
Foreign exchange rates
Based on management’s long-term rate assumptions, with reference to a range of underlying economic indicators.
Sensitivity to changes in assumptions used in calculations
Reductions or increases in the long-term oil and gas prices of 10 per cent are considered to be reasonably possible changes for the purpose
of sensitivity analysis. As shown in note 2 of the financial statements, the decreases to the long-term oil and gas prices from 2028 specified
above would result in a further pre-tax impairment of $330 million (post-tax $99 million) and increases to the long-term oil and gas prices
would result in a no material change to the impairment charge.
Considering the discount rates, the Group believes a one per cent increase in the post-tax discount rate is considered to be a reasonable
possibility for the purpose of sensitivity analysis. A one per cent increase in the post-tax discount rate would lead to a further pre-tax
impairment of $113 million (post-tax $33 million) on oil and gas assets and $10 million on goodwill, and a one per cent decrease in the
post-tax discount rate would lead to a lower pre-tax impairment charge of $129 million (post-tax $41 million).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
163
13. Leases
This note provides information for leases where the Group is a lessee.
Balance sheet
   
   
Land and
   
Offshore
   
   
buildings
Drilling rigs
FPSO
facilities
Equipment
Total
Right-of-use assets
Note
$ million
$ million
$ million
$ million
$ million
$ million
Cost
             
At 1 January 2023
 
88
169
562
334
20
1,173
Additions during the year
 
25
1
26
Cost revisions/remeasurements
 
1
48
63
(6)
4
110
Reclassification as asset held for sale
2
(5)
(71)
(76)
Disposals
 
(4)
(19)
(23)
Currency translation adjustment
 
4
10
1
15
At 31 December 2023
 
109
208
554
328
26
1,225
Restated
 
5
71
76
At 31 December 2023 as restated
 
114
208
625
328
26
1,301
Additions during the year
1
 
27
166
193
Additions from business combinations and
             
joint arrangements
1
 
55
4
47
106
Cost revisions/remeasurements
 
6
38
3
32
(11)
68
Reclassification of asset held for sale
18
(71)
(2)
(73)
Disposals
 
(5)
(5)
Currency translation adjustment
 
(3)
(5)
(1)
(9)
At 31 December 2024
 
194
411
557
360
59
1,581
Accumulated depreciation
             
At 1 January 2023
 
26
129
209
61
13
438
Charge for the year
 
9
42
94
89
5
239
Reclassification of asset held for sale
2
(2)
(23)
(25)
Disposals
 
(4)
(19)
(23)
Currency translation adjustment
 
1
7
1
9
At 31 December 2023
 
30
159
280
150
19
638
Restated
 
2
29
31
As 31 December 2023 as restated
 
32
159
309
150
19
669
Charge for the year
 
16
99
83
76
11
285
Impairment charge
2
 
20
20
Reclassification of asset held for sale
18
(40)
(40)
Disposals
 
(5)
(5)
Currency translation adjustment
 
(1)
(3)
(4)
At 31 December 2024
 
62
255
352
226
30
925
Net book value
             
At 31 December 2023 as restated
 
82
49
316
178
7
632
At 31 December 2024
 
132
156
205
134
29
656
1
Additions of $299 million including $106 million related to business combinations (note 14) were made to the right-of-use assets during the year (2023: total additions of $26 million
related to new land and buildings).
2
The impairment charge of $20 million relates to one of the Group’s office buildings in the UK.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
164
13. Leases
continued
   
     
2023
   
2024
As restated
Lease liabilities
Note
$ million
$ million
At 1 January as restated
 
768
825
Additions
 
193
28
Additions from business combinations and joint arrangements
14
118
Remeasurement
 
67
110
Finance costs charged to income statement
7
53
51
Finance costs charged to decommissioning provision
21
1
1
Reclassification of liabilities as held for sale
18
(78)
Lease payments
 
(319)
(262)
Currency translation adjustment
 
(11)
15
At 31 December
 
792
768
Classified as:
     
Current
 
241
216
Non-current
 
551
552
Total lease liabilities
 
792
768
The significant portion of the Group’s lease liabilities represent lease arrangements for an FPSO vessel on the Catcher asset, and offshore
facilities on the Tolmount asset oil and gas infrastructure assets in the UK business unit.
The lease liabilities and associated right-of-use-assets have been calculated by reference to in-substance fixed lease payments in the
underlying agreements incurred throughout the non-cancellable period of the lease along with periods covered by options to extend and
terminate the lease where the Group is reasonably certain that such options will be exercised. When assessing whether extension options
were likely to be exercised, assumptions are consistent with those applied when testing for impairment.
Income statement
   
   
2024
2023
Depreciation charge of right-of-use assets
Note
$ million
$ million
Land and buildings – non-oil and gas assets
1
 
35
8
Land and buildings – oil and gas assets
 
1
1
Drilling rigs
 
99
42
FPSO
 
83
99
Offshore facilities
 
77
89
Equipment – non-oil and gas assets
 
1
1
Equipment – oil and gas assets
 
9
4
   
305
244
Capitalisation of IFRS 16 lease depreciation
2
     
Drilling rigs
 
(77)
(25)
Equipment
 
(4)
(2)
Depreciation charge included within consolidated income statement
 
224
217
Lease interest
7
53
51
1
Includes impairment charge of $20 million related to one of the Group’s office buildings in the UK.
2
Of the $81 million (2023: $27 million) capitalised IFRS 16 lease depreciation, $64 million (2023: $18 million) has been capitalised within property, plant and equipment and $17 million
(2023: $9 million) within provisions (note 21).
The total cash outflow for leases in 2024 was $319 million (2023: $259 million).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
165
14. Business combinations
Business combinations during the year ended 31 December 2024
On 3 September 2024, the Group closed the transaction to acquire substantially all of Wintershall Dea’s upstream assets from BASF and
LetterOne, including those in Norway, Germany, Denmark, Argentina, Mexico, Egypt, Libya and Algeria as well as Wintershall Dea’s carbon
capture and storage (CCS) licences in Europe. The Group acquired the portfolio as it significantly increases production capacity and provides
geographic diversification, adding high quality assets with material positions in Norway, Germany, Argentina, North Africa and Mexico. It also
strengthens the Group’s financial position, delivering investment grade credit ratings post-transaction. The Group acquired control through
the payment of cash and issuance of shares to BASF and LetterOne.
A purchase price allocation (PPA) exercise has been performed under which the identifiable assets and liabilities of Wintershall Dea were
recognised at fair value. The fair values, and resulting goodwill, are provisional and will be finalised in Harbour’s full year 2025 financial
statements. The provisional fair values of the net identifiable assets as at the date of acquisition are as follows:
   
   
Fair value
   
recognised on
   
acquisition
 
Note
$ million
Non-current assets
   
Other intangible assets
11
4,409
Property, plant and equipment
12
10,011
Right-of-use assets
13
106
Deferred tax assets
8
147
Other receivables
16
56
Other financial assets
23
52
Current assets
   
Inventories
15
213
Trade and other receivables
16
1,305
Other financial assets
23
188
Cash and cash equivalents
17
748
Total assets
 
17,235
Non-current liabilities
   
Borrowings
22
3,038
Provisions
21,28
2,616
Deferred tax
8
5,500
Trade and other payables
20
25
Lease creditor
13
86
Other financial liabilities
23
99
Current liabilities
   
Trade and other payables
20
1,134
Borrowings
22
41
Lease creditor
13
32
Provisions
21,28
324
Current tax liabilities
8
1,128
Other financial liabilities
23
218
Total liabilities
 
14,241
Fair value of identifiable net assets acquired
 
2,994
Subordinated notes measured at fair value
1
26
(1,548)
Goodwill arising on acquisition
10
3,845
Purchase consideration transferred
 
5,291
1
Subordinated notes accounted for within equity, see note 26.
The fair values of the oil and gas assets and intangible assets acquired have been determined using valuation techniques based on discounted
cash flows using forward curve commodity prices and estimates of long-term prices consistent with those applied by management when testing
assets for impairment, a discount rate based on market observable data and cost and production profiles generally consistent with the 2P and
a component of 2C reserves, if applicable, acquired with each asset. Where applicable, other observable market information has also been used.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
166
14. Business combinations
continued
The decommissioning provisions recognised have been estimated based on Harbour’s internal estimates with reference to observable
market data, including rig rates.
The equity consideration settled in ordinary shares of $2,513 million has been calculated based on 669,714,027 BASF consideration
shares being issued by the company at a price of £2.86 per share, being the closing price of ordinary shares on the acquisition date
and translated at the spot pound sterling to US dollar rate on that date of £1:$1.3122.
The equity consideration settled in non-voting shares of $944 million has been calculated based on 251,488,211 non-voting shares being
issued at their fair value, measured in accordance with IFRS 13 Fair Value Measurement. A binomial lattice valuation methodology has been
utilised to determine the fair value of the non-voting shares based on the value of ordinary shares with inputs that reflect the different features
of these shares. Key assumptions input into the fair value model include: timing and quantum of future dividend payments; estimates of the
timing of lifting of relevant sanctions on the minority ultimate beneficial owners of LetterOne; estimated date of conversion to ordinary shares
under certain conditions; expected volatility of ordinary shares; appropriate discount rate; and discount for lack of marketability. The resultant
fair value of a non-voting share has been determined to closely approximate that of an ordinary share, £2.86 per share, being the closing
price of ordinary shares on the acquisition date and translated at the spot pound sterling to US dollar rate on that date of £1:$1.3122.
The acquisition date fair value of the trade receivables amounts to $936 million. The gross amount of trade receivables is $1,015 million,
which is expected to be collected within contractual terms.
The fair value of the subordinated notes has been determined by reference to quoted market prices in Euros translated to US dollars at the
exchange rate prevailing on the date of acquisition.
The goodwill of $3,845 million arises principally from the requirement to recognise deferred tax assets and liabilities for the difference between
the assigned fair values and the tax bases of the acquired assets and liabilities assumed in a business combination. The assessment of fair
values of oil and gas assets acquired is based on cash flows after tax. Nevertheless, in accordance with IAS 12 Income Taxes, paragraphs 15
and 19, a provision is made for deferred tax corresponding to the tax rate multiplied by the difference between the acquisition cost and the
tax base. The offsetting entry to this deferred tax is goodwill. Hence, goodwill arises as a technical effect of deferred tax (technical goodwill).
There are no specific IFRS guidelines pertaining to the allocation of technical goodwill and management has therefore applied the general guidelines for
allocating goodwill. Technical goodwill is allocated by segment, in line with where it arises, and none is expected to be deductible for income tax purposes.
From the date of acquisition, the Wintershall Dea assets contributed $2,021 million of revenue and $867 million to profit before tax from
continuing operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations
would have been $10,516 million and profit before tax from continuing operations for the Group would have been $3,017 million.
   
 
$ million
Purchase consideration
 
Shares issued, at fair value
3,457
Cash paid
1,782
Contingent consideration
52
Total consideration
5,291
Analysis of cash flows on acquisition:
 
Transaction costs of the acquisition (included in cash flows from operating activities)
(118)
Net cash acquired with the subsidiaries (included in cash flows from investing activities)
748
Transaction costs attributable to issuance of shares (included in cash flows from financing activities, net of tax)
(1)
Net cash flow on acquisition
629
It should be noted that, at the date of completion, a cash payment of $1,792 million was made to the former owners of Wintershall Dea.
This payment is reflected in the consolidated statement of cash flows. Subsequently, and as contemplated by the business combination
agreement, a reduction in cash consideration payable of $10 million was identified, reducing the cash consideration to $1,782 million.
This is reflected in the fair value of consideration above. As the review period is ongoing, and further adjustments may be identified, this
$10 million has not yet been repaid to the company.
Transaction costs of $119 million (2023: $33 million) were expensed and are included in administrative expenses.
Contingent consideration
As part of the purchase agreement with the previous owners of the Wintershall Dea assets, contingent consideration has been agreed,
dependent on the average Brent price during six six-month periods ending 18, 24, 30, 36, 42 and 48 months after completion. If during
any of these six-month periods, the average Brent price is:
greater than or equal to $86 per barrel but less than or equal to $100 per barrel, a cash payment of $30 million will be made;
greater than $100 per barrel, a cash payment of $50 million will be made; or
less than $86 per barrel, no cash payment will be made.
As at the acquisition date, the fair value of the contingent consideration was estimated to be $52 million, determined using an option pricing
model. The contingent consideration is classified as a long-term other financial liability (see note 23).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
167
15. Inventories
   
   
2023
 
2024
As restated
 
$ million
$ million
Hydrocarbons
56
49
Consumables and subsea supplies
312
168
Total inventories
368
217
Inventories of consumables and subsea supplies include a provision of $39 million (2023: $28 million) where it is considered that the net
realisable value is lower than the original cost.
Inventories recognised as an expense during the year ended 31 December 2024 amounted to $7 million (2023: $1 million). These
expenses are included within production costs.
16. Trade and other receivables
   
   
2023
 
2024
As restated
 
$ million
$ million
Trade receivables
1,203
372
Underlift position
175
146
Other debtors
249
86
Prepayments and accrued income
631
223
Corporation tax receivable
58
46
Total trade and other receivables
2,316
873
Trade receivables are non-interest bearing and are generally on 20-to-30-day terms. As at 31 December 2024, there were $433 million
of trade receivables that were past due (2023: $nil), primarily relating to operations in the Mexico and North Africa segments.
Prepayments and accrued income mainly comprise amounts due, but not yet invoiced, for the sale of oil and gas.
The carrying value of the trade and other receivables are equal to their fair value as at the balance sheet date.
During the fourth quarter of 2024, the Group issued a credit default swap (CDS) for a notional amount of $60 million to a third-party
financial institution. The CDS relates to secured borrowing provided by the financial institution to one of the Group’s customers in Mexico.
The secured borrowing was utilised by the customer to pay certain of our outstanding receivables. The notional amount of the CDS
outstanding as of 31 December 2024 was $32 million and will reduce on a monthly basis over its 22-month term. The fair value of this
derivative liability was not material as at 31 December 2024.
Other long-term receivables
   
   
2023
 
2024
As restated
 
$ million
$ million
Net investment in sublease
37
Decommissioning funding asset
1
59
56
Other receivables
2
107
216
Prepayments and accrued income
10
Total other long-term receivables
176
309
1
The decommissioning funding asset relates to the decommissioning liability agreement entered into with E.ON who will reimburse 70 per cent on the net share of the total
decommissioning cost of the two assets in the UK to a maximum possible funding of £63 million. At 31 December 2024, a long-term decommissioning funding asset of $59 million
(2023: $56 million) has been recognised.
2
Other receivables includes $44 million in cash held in escrow accounts for expected future decommissioning expenditure in Indonesia (2023: $39 million). Other receivables at
December 2023 also included $21 million held as security for the Mexican letters of credit, and $42 million related to the non-current element of the unamortised portion of issue costs
and bank fees related to the RBL (see note 22).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
168
17. Cash and cash equivalents
   
   
2023
 
2024
As restated
 
$ million
$ million
Cash at banks and in hand
805
286
Cash at bank earns interest at floating rates based on daily bank deposit rates. The Group only deposits cash with major banks of high
quality credit standing.
Included in cash and cash equivalents at 31 December 2024 were amounts in Argentina totalling $173 million (2023: $nil) subject
to currency controls or other legal restrictions. In addition, the cash and cash equivalents balance includes an amount of $43 million
(2023: $nil) required to cover initial margin on trading exchanges, counterparty margining on outstanding commodity trades and all
other balances subject to restriction.
18. Assets held for sale
In December 2024, the Group entered into an exclusivity agreement to sell its business in Vietnam, which holds 53.125 per cent interest
in the Chim Sáo and Dua producing fields, to EnQuest for a consideration of $84 million. The transaction has an effective date of 1 January
2024. The assets and liabilities of Vietnam have been classified as assets held for sale in the balance sheet as at 31 December 2024,
as completion is expected to be achieved by the second quarter of 2025.
The Group’s Vietnam operations are included in the Southeast Asia segment, previously International, however are not considered a major
geographical area or line of business and therefore the disposal has not been classified as discontinued operations.
In the prior period, the Vietnam business had also been classified as held for sale based on a prior agreement. In August 2023, the Group
had entered into a Sale and Purchase Agreement to sell its business in Vietnam to Big Energy Joint Stock Company, however this was
terminated in May 2024. As a result the Vietnam business was declassified as assets held for sale. Therefore, the relevant amounts
presented as assets held for sale in 31 December 2023 have been reclassified to reflect this.
The major classes of assets and liabilities of the Group as held for sale as at 31 December 2024 are as follows:
   
   
2024
 
Note
$ million
Current
   
Assets
   
Property, plant and equipment
12
74
Right-of-use-assets
13
33
Other receivables and working capital
 
170
Assets held for sale
 
277
Liabilities
   
Provisions
21
90
Lease creditor
13
78
Trade and other payables
 
46
Deferred tax
8
19
Liabilities directly associated with assets held for sale
 
233
Net assets directly associated with disposal group
 
44
Impairment loss recorded
 
10
Immediately before the classification of the disposal group as assets held for sale, the recoverable amount was estimated for the disposal
group and no impairment loss was identified. The assets in the disposal group are held at the lower of their carrying amount and fair value
less costs to sell. As at 31 December 2024, a post-tax impairment of $10 million was recognised as the fair value less cost to sell, being
the expected consideration adjusted for items agreed under the SPA, was below the carrying amount of the disposal group. Following the
impairment charge the net assets directly associated with the disposal group held on the consolidated balance sheet was $44 million.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
169
19. Commitments
Capital commitments
As at 31 December 2024, the Group had commitments for future capital expenditure amounting to $1,690 million (2023: $389 million).
Where the commitment relates to a joint arrangement, the amount represents the Group’s net share of the commitment. Where the Group
is not the operator of the joint arrangement then the amounts are based on the Group’s net share of committed future work programmes.
20. Trade and other payables
   
   
2023
 
2024
As restated
 
$ million
$ million
Current
   
Trade payables
1,365
680
Overlift position
207
33
Other payables
132
144
Matured financial instruments
27
48
Deferred income
1
24
10
 
1,755
915
Non-current
   
Other payables
19
13
Deferred income
1
11
 
30
13
1
Deferred income includes $19 million (2023: $nil) relating to payments for oil not yet delivered and $5 million (2023: $10 million) in relation to the closing year-end fair value payable
to FlowStream who historically provided funding for the Solan asset in the UK in return for a share in production.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
170
21. Provisions
   
     
Employee
Onerous
   
 
Decommissioning
Pension
obligation
contract
Other
 
 
provision
provision
provision
provision
provisions
Total
 
$ million
$ million
$ million
$ million
$ million
$ million
At 1 January 2023
4,141
24
4,165
Additions
40
40
Changes in estimates – decrease to oil and gas tangible
           
decommissioning assets
(203)
(203)
Changes in estimates on oil and gas tangible assets – debit to income
           
statement
141
141
Changes in estimate on oil and gas intangible assets – debit to income
           
statement
4
4
Changes in estimate – debit to income statement
3
3
Amounts used
(248)
(248)
Reclassification of liabilities directly associated with assets held for sale
(87)
(87)
Interest on decommissioning lease
(1)
(1)
Depreciation, depletion and amortisation on decommissioning
           
right-of-use leased asset
(9)
(9)
Unwinding of discount
156
156
Currency translation adjustment
87
87
At 31 December 2023
4,021
27
4,048
Restated
87
87
At 31 December 2023 as restated
4,108
27
4,135
Additions
36
36
Additions from business combinations and joint arrangements
2,511
40
40
65
284
2,940
Changes in estimates – increase to oil and gas tangible
           
decommissioning assets
550
550
Changes in estimates – increase to oil and gas intangible assets
6
6
Changes in estimate on oil and gas tangible assets
           
– debit to income statement
174
174
Changes in estimate on oil and gas intangible assets
           
– debit to income statement
6
6
Changes in estimate – debit to income statement
3
3
29
28
63
Actuarial gains and losses
7
7
Amounts used
(284)
(1)
(25)
(30)
(36)
(376)
Reclassification of liabilities directly associated with assets held for sale
(90)
(90)
Interest on decommissioning lease
(1)
(1)
Depreciation, depletion and amortisation on decommissioning
           
right-of-use leased asset
(17)
(17)
Unwinding of discount
221
221
Currency translation adjustment
(109)
(3)
(3)
(18)
(133)
At 31 December 2024
7,114
46
68
35
258
7,521
   
 
Non-current
Current
 
 
liabilities
liabilities
Total
Classified within
$ million
$ million
$ million
At 31 December 2023
3,905
230
4,135
At 31 December 2024
7,024
497
7,521
All of the $36 million decommissioning provision additions relate to oil and gas tangible assets (2023: $40 million).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
171
Decommissioning provision
The Group provides for the estimated future decommissioning costs on its oil and gas assets at the balance sheet date. The payment dates
of expected decommissioning costs are uncertain and are based on economic assumptions of the fields concerned. The Group currently
expects to incur decommissioning costs within the next 40 years, around half of which are anticipated to be incurred between the next 10
to 20 years. These estimated future decommissioning costs are inflated at the Group’s long-term view of inflation of 2.5 per cent per annum
(2023: 2.5 per cent per annum) and discounted at a risk-free rate of between 2.2 per cent and 6.6 per cent (2023: 4.3 per cent and 5.2
per cent) reflecting a six-month (2023: six-month) rolling average of market rates over the varying lives of the assets to calculate the present
value of the decommissioning liabilities. The unwinding of the discount is presented within finance costs.
These provisions have been created based on internal and third-party estimates. Assumptions based on the current economic environment
have been made, which management believe are a reasonable basis upon which to estimate the future liability. These estimates are
reviewed regularly to consider any material changes to the assumptions. However, actual decommissioning costs will ultimately depend upon
market prices for the necessary decommissioning work required, which will reflect market conditions at the relevant time. In addition, the
timing of decommissioning liabilities will depend upon the dates when the fields become economically unviable, which in itself will depend
on future commodity prices and climate change, which are inherently uncertain.
Pension provision
Please refer to note 28 for pension provisions.
Employee obligation provisions
Employee obligation provisions of $68 million relate to obligations to pay long-service bonuses, anniversary bonuses, and variable
remuneration, including the associated social security contributions and provisions due to early retirement as well as phased-in early
retirement models. This includes a termination benefit provision in Indonesia of $26 million (2023: $27 million), where the Group operates
a service, severance and compensation pay scheme under a collective labour agreement with the local workforce.
Onerous contract provision
The onerous contract provision of $35 million (2023: $nil) relates to working programmes in Libya due to force majeure conditions in-country.
Other provisions
Other provisions mainly includes a $132 million provision related to gas migration in Rehden, Germany arising from a commercial settlement
entered into by Wintershall Dea and a third party at the time of the Wintershall and Dea merger in 2019 and a $61 million provision related
to restructuring programmes within Norway, Germany and Mexico.
22. Borrowings and facilities
The Group’s borrowings are carried at amortised cost:
   
 
2024
2023
 
$ million
$ million
Bonds
5,011
493
Revolving credit facility
218
Other loans
16
Total borrowings
5,229
509
Classified within
   
Non-current liabilities
4,215
493
Current liabilities
1,014
16
Total borrowings
5,229
509
Bonds
   
         
31 December 2024
       
Nominal value
Fair value
Carrying value
 
%
Maturity
Currency
€/$ million
$ million
$ million
Bond ISIN: XS2054209833
0.8
2025
EUR
1,000
1,019
1,014
Bond ISIN: US411618AB75/ USG4289TAA19
5.5
2026
USD
500
499
496
Bond ISIN: XS2054210252
1.3
2028
EUR
1,000
962
954
Bond ISIN: XS2908093805
3.8
2029
EUR
700
729
720
Bond ISIN: XS2055079904
1.8
2031
EUR
1,000
905
901
Bond ISIN: XS2908095172
4.4
2032
EUR
900
940
926
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
172
22. Borrowings and facilities
continued
In October 2021, Harbour Energy plc issued a $500 million bond under Rule 144A and with a tenor of five years to maturity. The coupon was
set at 5.50 per cent and interest is payable semi-annually.
Under the terms of the business combination entered into between the company, BASF and LetterOne, three existing Wintershall Dea bonds
were ported to Harbour Energy on completion of the acquisition.
As at 31 December 2024, the fair value of these bonds, which is determined using quoted market prices in an active market, amounts
to $2,886 million. The repayment obligation remains at €3,000 million ($3,106 million).
On 26 September 2024, Harbour announced that Wintershall Dea Finance BV as issuer, a subsidiary of Harbour, priced an offering on
25 September 2024 of €700 million in aggregate principal amount of 3.830 per cent senior notes due 2029 and €900 million in aggregate
principal amount of 4.357 per cent senior notes due 2032. Harbour primarily used the proceeds from this offering to repay and cancel
the $1.5 billion bridge facility utilised for the Wintershall Dea acquisition which completed on 3 September 2024.
The previous reserve based lending (RBL) facility was replaced upon completion of the acquisition by the new bridge and revolving credit facility (RCF).
At the balance sheet date, the outstanding RCF balance, excluding incremental arrangement fees, related costs and letters of credit, was $250 million
(2023: RBL $nil). As at 31 December 2024, $1,854 million remained available for drawdown under the RCF (2023: $1,972 million under the RBL).
The Group has facilities to issue up to $1,750 million of letters of credit (2023: $1,750 million), of which $871 million (2023: $1,186 million)
was in issue as at 31 December 2024, mainly in respect of future decommissioning liabilities.
Arrangement fees and related costs of $276 million were capitalised when the three existing Wintershall Dea bonds were ported to
Harbour Energy on completion of the acquisition. In addition, $34 million of arrangement fees and related costs in relation to the RCF,
$13 million in relation to the bridge facility and $11 million related to the €700 million and €900 million senior notes, were capitalised
during the year. $102 million of arrangement fees and related costs were amortised during the year and are included within financing
costs, including $66 million related to the RBL facility and $13 million related to the bridge facility, upon termination of those facilities.
At 31 December 2024, $284 million of arrangement fees and related costs remain capitalised (2023: $68 million). $32 million of these
arrangement fees relate to the RCF, and a further $252 million (2023: $7 million) relate to the bond facilities.
Interest of $34 million on the bonds and RCF facilities (Dec 2023: $6 million related to the $500 million bond interest) had accrued
by the balance sheet date and has been classified within accruals.
Other loans at 31 December 2023 represent a commercial financing arrangement with Baker Hughes (formerly BHGE) which was repaid
in full in December 2024.
The table below details the change in the carrying amount of the Group’s borrowings arising from financing cash flows:
   
 
$ million
Total borrowings as at 1 January 2023
1,238
Proceeds from drawdown of borrowing facilities
660
Repayment of RBL
(1,435)
Repayment of financing arrangement
(21)
Repayment of exploration finance facility loan
(11)
Arrangement fees and related costs capitalised
(34)
Financing arrangement interest payable
3
Amortisation of arrangement fees and related costs
48
Reclassification of RBL arrangement fees and related costs to current and non-current assets
61
Total borrowings as at 31 December 2023
509
Reclassification of capitalised RBL arrangement fees and related costs as borrowings
(61)
Proceeds from RBL facility
178
Repayment of RBL facility
(178)
Proceeds from issue of bridge facility
1,500
Repayment of bridge facility
(1,500)
Bond debt arising on business combination (net of arrangement fees and related costs)
3,038
Proceeds from issue of new bonds
1,728
Proceeds from issue of revolving credit facility
2,225
Repayment of revolving credit facility
(1,975)
Arrangement fees and related costs capitalised
(58)
Amortisation of arrangement fees and related costs
102
Repayment of financing arrangement
(17)
Financing arrangement interest payable
1
Currency translation adjustment on Euro bonds
(263)
Total borrowings as at 31 December 2024
5,229
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
173
23. Other financial assets and liabilities
The Group held the following financial instruments at fair value at 31 December 2024. The fair values of all derivative financial instruments
are classified in accordance with the hierarchy described in IFRS 13.
 
31 December 2024
31 December 2023
 
Assets
Liabilities
Assets
Liabilities
Current
$ million
$ million
$ million
$ million
Measured at fair value through profit and loss
       
Foreign exchange derivatives
(25)
6
Commodity derivatives
26
(14)
Short-term investments
25
Fair value of embedded derivative within gas contract
5
10
 
56
(39)
16
Measured at fair value through other comprehensive income
       
Commodity derivatives
89
(396)
154
(197)
Foreign exchange derivatives
(27)
 
89
(423)
154
(197)
Total current
145
(462)
170
(197)
Non-current
       
Measured at fair value through profit and loss
       
Commodity derivatives
1
(2)
Contingent consideration
1
(52)
Other financial assets-investments
7
 
8
(54)
Measured at fair value through other comprehensive income
       
Commodity derivatives
36
(215)
112
(87)
Foreign exchange derivatives
(146)
 
36
(361)
112
(87)
Total non-current
44
(415)
112
(87)
Total current and non-current
189
(877)
282
(284)
1
Contingent consideration relates to the Wintershall Dea transaction and will be paid between 18-48 months after completion, depending on the average Brent crude price during
six-month periods. This is valued using an option pricing model.
Fair value measurements
All financial instruments that are initially recognised and subsequently remeasured at fair value have been classified in accordance with
the hierarchy described in IFRS 13 Fair Value Measurement. The hierarchy groups fair value measurements into the following levels based
on the degree to which the fair value is observable.
Level 1:
fair value measurements are derived from unadjusted quoted prices for identical assets or liabilities
Level 2:
fair value measurements include inputs, other than quoted prices included within level 1, which are observable directly or indirectly
Level 3:
fair value measurements are derived from valuation techniques that include significant inputs not based on observable data
   
Financial assets
Financial liabilities
 
Level 1
Level 2
Level 3
Level 2
Level 3
As at 31 December 2024
$ million
$ million
$ million
$ million
$ million
Fair value of embedded derivative within gas contract
5
Commodity derivatives
152
(627)
Argentinian bonds
25
Foreign exchange derivatives
(198)
Investments
7
Contingent consideration
(52)
Total fair value
25
157
7
(825)
(52)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
174
23. Other financial assets and liabilities
continued
As at 31 December 2023
   
   
Financial assets
Financial liabilities
 
Level 1
Level 2
Level 3
Level 2
Level 3
 
$ million
$ million
$ million
$ million
$ million
Fair value of embedded derivative within gas contract
10
Commodity derivatives
266
(284)
Foreign exchange derivatives
6
Total fair value
282
(284)
There were no transfers between fair value levels in 2023 or 2024.
Fair value movements recognised in the income statement on financial instruments are shown below:
   
 
2024
2023
Finance income
$ million
$ million
Change in fair value of embedded derivative within gas contract
68
Commodity derivatives
5
Argentinian bonds
7
Interest rate derivatives
(43)
 
12
25
   
 
2024
2023
Finance expenses
$ million
$ million
Change in fair value of embedded derivative within gas contract
5
Foreign exchange derivatives
30
 
35
Fair values of other financial instruments
The following financial instruments are measured at amortised cost and are considered to have fair values different to their book values.
   
   
2024
 
2023
 
Book value
Fair value
Book value
Fair value
 
$ million
$ million
$ million
$ million
USD bond
(496)
(499)
(493)
(487)
EUR bonds
(4,515)
(4,555)
Total
(5,011)
(5,054)
(493)
(487)
The fair value of the bonds is within level 2 of the fair value hierarchy and has been estimated by discounting future cash flows by the relevant
market yield curve at the balance sheet date. The fair values of other financial instruments not measured at fair value including cash and
short-term deposits, trade receivables, trade payables and floating rate borrowings equate approximately to their carrying amounts.
Cash flow hedge accounting
The Group uses a combination of fixed price physical sales contracts and cash-settled fixed price commodity swaps and options to manage
the price risk associated with its underlying oil and gas revenues. As at 31 December 2024, all of the Group’s cash-settled fixed price
commodity swap derivatives have been designated as cash flow hedges of highly probable forecast sales of oil and gas.
The following table indicates the volumes, average hedged price and timings associated with the Group’s commodity hedges:
   
Position as at 31 December 2024
2025
2026
2027
Oil
     
Total oil volume hedged (thousand bbls)
16,162
12,881
– of which swaps
15,598
12,881
– of which zero cost collars
564
Weighted average fixed price ($/bbl)
76.47
72.88
Weighted average collar floor and cap ($/bbl)
60.00-86.78
Natural gas
     
Gas volume hedged (thousand boe)
33,509
19,924
2,056
– of which swaps/fixed price forward sales
26,912
16,817
2,056
– of which zero cost collars
6,597
3,106
Weighted average fixed price ($/mscf)
12.91
10.79
11.29
Weighted average collar floor and cap ($/mscf)
11.46-22.50
9.04-16.71
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
175
As at 31 December 2024, the fair value of net commodity derivatives designated as cash flow hedges, all executed under ISDA agreements
with no margining requirements, was a net payable of $513 million (2023: $66 million payable) and net unrealised pre-tax losses of
$487 million (2023: $16 million) were deferred in other comprehensive income in respect of the effective portion of the hedge relationships.
Amounts deferred in other comprehensive income will be released to the income statement as the underlying hedged transactions occur.
As at 31 December 2024, net deferred pre-tax losses of $307 million (2023: $51 million) are expected to be released to the income
statement within one year.
Hedge ineffectiveness
The following table summarises the hedge ineffectiveness as at 31 December:
   
 
2024
2023
 
$ million
$ million
Commodity derivatives
Foreign exchange derivatives
8
 
8
24. Financial risk factors and risk management
The Group’s principal financial assets and liabilities comprise trade and other receivables, cash and short-term deposits accounts,
trade payables, interest bearing loans and derivative financial instruments. The main purpose of these financial instruments is to manage
short-term cash flow, price exposures and raise finance for the Group’s expenditure programme. Further information on the Group’s financial
instrument risk management objectives, policies and strategies is set out in the discussion of our financial discipline principal risk in the
Strategic report (see page 67).
Risk exposures and responses
The Group manages its exposure to key financial risks in accordance with its financial risk management policy. The objective of the policy is
to support the delivery of the Group’s financial targets while protecting future financial security. The main risks that could adversely affect the
Group’s financial assets, liabilities or future cash flows are market risks comprising commodity price risk, interest rate risk and foreign currency
risk, liquidity risk, and credit risk. Management reviews and agrees policies for managing each of these risks which are summarised in this note.
The Group’s management oversees the management of financial risks. The Group’s senior management ensures that financial risk-taking
activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance
with Group policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the
appropriate skills, experience and supervision. It is the Group’s policy that no trading in derivatives for speculative purposes shall be undertaken.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: commodity price risk, interest rate risk and foreign currency risk. Financial instruments mainly
affected by market risk include loans and borrowings, deposits and derivative financial instruments.
The sensitivity analyses in the following sections relate to the position as at 31 December 2024 and 31 December 2023.
The sensitivity analyses have been prepared on the basis that the number of financial instruments are all constant. The sensitivity analyses
are intended to illustrate the sensitivity to changes in market variables on the composition of the Group’s financial instruments at the
balance sheet date and show the impact on profit or loss and shareholders’ equity, where applicable.
The following assumptions have been made in calculating the sensitivity analyses:
The sensitivity of the relevant profit before tax item and/or equity is the effect of the assumed changes in respective market risks
for the full year based on the financial assets and financial liabilities held at the balance sheet date
The sensitivities indicate the effect of a reasonable increase in each market variable. Unless otherwise stated, the effect
of a corresponding decrease in these variables is considered approximately equal and opposite
Fair value changes from derivative instruments designated as cash flow hedges are considered fully effective and recorded
in shareholders’ equity, net of tax
Fair value changes from derivatives and other financial instruments not designated as cash flow hedges are presented as a sensitivity
to profit before tax only and not included in shareholders’ equity
Commodity price risk
The Group is exposed to the risk of fluctuations in prevailing market commodity prices on the mix of oil and gas products. On a rolling basis,
the policy allows the Group to hedge the commodity price exposure associated with 40 to 70 per cent of the next 12 months’ production
(year 1), between 30 and 60 per cent of year 2 production, from year 3 up to 50 per cent of production and from year 4 up to 40 per cent
of production. Current target is to hedge circa 50 per cent of year 1 and up to 30 per cent of year 2 commodity price exposure. The Group
manages these risks through the use of fixed price contracts with customers for physical delivery and derivative financial instruments
including fixed price swaps and options.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
176
24. Financial risk factors and risk management
continued
Commodity price sensitivity
The following table summarises the impact on the Group’s pre-tax profit and equity from a reasonably foreseeable movement in commodity
prices on the fair value of commodity based derivative instruments held by the Group at the balance sheet date.
Effect on profit
Effect on
before tax
equity
As at 31 December 2024
Market movement
$ million
$ million
Brent oil price
$10/bbl increase
(91)
Brent oil price
$10/bbl decrease
91
NBP gas price
£0.1/therm increase
(36)
NBP gas price
£0.1/therm decrease
36
European Title Transfer Facility (TTF)
$1.5/mmbtu increase
15
(14)
European Title Transfer Facility (TTF)
$1.5/mmbtu decrease
(15)
14
Trading Hub Europe (THE)
$1.5/mmbtu increase
(15)
(46)
Trading Hub Europe (THE)
$1.5/mmbtu decrease
15
46
Effect on profit
Effect on
before tax
equity
As at 31 December 2023
Market movement
$ million
$ million
Brent oil price
$10/bbl increase
(28)
Brent oil price
$10/bbl decrease
28
NBP gas price
£0.1/therm increase
(28)
NBP gas price
£0.1/therm decrease
28
Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term debt obligation
with floating interest rates.
At 31 December 2024, floating rate borrowings comprise loans under the RCF which incur interest between 5.9 and 6.6 per cent (based
on the Secured Overnight Financing Rate (SOFR) plus a 1.45 per cent margin) and fixed rate borrowings comprise a $500 million high yield
bond which incurs interest at 5.5 per cent per annum and bonds of €4.6 billion which incur interest at between 0.84 per cent and 4.357 per
cent per annum (see note 22). As at 31 December 2023, fixed rate borrowings comprised a bond incurring interest at 5.5 per cent per
annum, and no floating rate borrowings. Floating rate financial assets comprise cash and cash equivalents which earn interest at the relevant
market rate. Prior to settlement of the RBL, the Group monitored its exposure to fluctuations in interest rates and uses interest rate
derivatives to manage the fixed and floating composition of its borrowings.
The interest rate financial instruments in place at the balance sheet date are shown below:
Derivative
Currency pair
Notional amount
Period of hedge
Terms
31 December 2024
Cross-currency
USD:EUR
€363 million
<1 year
$1.1015:€1
interest rate swaps
€1,403 million
2–5 years
$1.1017–$1.1209:€1
€650 million
>5 years
$1.1209:€1
31 December 2023
Cross-currency
interest rate swaps
N/A
$nil
N/A
N/A
The cross-currency interest rate swaps relating to the Euro bonds have been designated as cash flow hedges where €2.4 billion was hedged
at a forward rate of between 1.1015 and 1.1209.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
177
The interest rate and currency profile of the Group’s interest-bearing financial assets and liabilities are shown below:
   
   
Fixed rate
Floating rate
 
 
Cash at bank
borrowings
borrowings
Total
As at 31 December 2024
$ million
$ million
$ million
$ million
US dollar
416
(496)
(218)
(298)
Pound sterling
75
75
Euro
75
(4,515)
(4,440)
Norwegian krone
36
36
Argentinian pesos
173
173
Mexican pesos
10
10
Egyptian pound
8
8
Other
12
12
 
805
(5,011)
(218)
(4,424)
   
   
Fixed rate
Floating rate
 
As at 31 December 2023
Cash at bank
borrowings
borrowings
Total
As restated
$ million
$ million
$ million
$ million
US dollar
244
(493)
(249)
Pound sterling
28
28
Norwegian krone
13
13
Other
1
1
 
286
(493)
(207)
Interest rate sensitivity
The following table demonstrates the indicative pre-tax effect on profit and equity of applying a reasonably foreseeable increase in interest
rates to the Group’s financial assets and liabilities at the balance sheet date.
   
   
Effect on profit before tax
Effect on equity
 
Market movement
$ million
$ million
31 December 2024
     
US dollar interest rates
+100 basis points
1
31 December 2023
     
US dollar interest rates
+100 basis points
2
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign
exchange rates.
The Group is exposed to foreign currency risk primarily arising from exchange rate movements in US dollar against a range of foreign
currencies. To mitigate exposure to movements in exchange rates, wherever possible financial assets and liabilities are held in currencies
that match the functional currency of the relevant entity. The Group has material subsidiaries with functional currencies of pound sterling,
US dollar, Norwegian krone, Euro and Mexican pesos. Exposures can also arise from sales or purchases denominated in currencies
other than the functional currency of the relevant entity; such exposures are monitored and hedged with agreement from the Board.
The Group enters into forward contracts as a means of hedging its exposure to foreign exchange rate risks. As at 31 December 2024,
the Group had:
£212.5 million hedged at a forward rate of between $1.2482 and $1.2774:£1 for January 2025
NOK 9.6 billion hedged at forward rates of between NOK 10.9805 and NOK 11.3963:£1 for the period January 2025 to May 2025
As at 31 December 2023, the Group had £212 million hedged at a forward rate of between $1.2182 and $1.2742:£1 for the period
from January 2024 to October 2024.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
178
24. Financial risk factors and risk management
continued
Foreign currency sensitivity
Changes in exchange rates could lead to losses in the value of financial instruments and adverse changes in future cash flows. Foreign
currency risks from financial instruments arise from the translation of financial receivables, cash and cash equivalents and financial liabilities
into the functional currency of the Group company at the closing rates. The following table demonstrates the sensitivity to a reasonably
foreseeable change in US dollars against other currencies with all other variables held constant, on the Group’s profit before tax (due to
foreign exchange translation of monetary assets and liabilities). The impact of translating the net assets of foreign operations into US dollars
is excluded from the sensitivity analysis.
   
 
Sensitivity (+10%)
Sensitivity (-10%)
 
$ million
$ million
31 December 2024
   
Pound sterling
239
(239)
Argentinian peso
(14)
(14)
Euro
(267)
267
Norwegian krone
81
(81)
Danish krone
7
(7)
Mexican peso
(1)
1
Egyptian pound
(1)
1
31 December 2023
   
Pound sterling
78
(78)
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer commercial contract, leading
to financial loss. Credit risks are managed on a Group basis. Group-wide procedures cover applications for credit approval for both financial
and non-financial counterparties where appropriate. These procedures cover the granting and renewal of counterparty credit limits, the
monitoring of exposures with respect to these limits and the requirements triggering secured payment terms.
The solvency of and credit exposures with all counterparties are monitored and assessed on a timely basis. If customers are independently
rated, these ratings are primarily used for assessment. If there is no independent rating, the credit risk management function assesses
customers’ credit quality based on their financial position or bases the assessment on experience and other factors. In these cases,
individual risk limits are set based on internal equivalent or by external ratings.
Credit risk in financial instruments arise from cash or cash equivalents and financial derivatives. The placing of liquid funds is subject
to credit approval. Banks with a credit rating of ‘A’ are normally used. In some cases, funds may be held in an overseas business unit
with lower credit quality which may also be impacted by the country sovereign rating. In these situations, credit approval is given within
the country risk environment. Derivative financial instruments are conducted with credit approved banks and financial institutions normally
rated A- or better and selected credit approved commercial counterparties. Selectively derivatives may be conducted with local banks
in asset territories below this rating subject to credit approval.
The Group is exposed to credit risk from its operating activities, primarily for trade receivables, and from its financing activities. The Group
seeks to trade only with recognised, creditworthy third parties. Trade receivables are monitored on an ongoing basis and credit exposures
related to receivables mark to market positions are monitored closely for credit decline which may allow the provision of contractual credit
support by a third party.
An indication of the concentration of credit risk on trade receivables is shown in note 4, whereby the revenue from one customer exceeds
54 per cent (2023: 88 per cent) of the Group’s consolidated revenue.
With regard to Harbour’s own credit risk management, it has corporate credit ratings from the following agencies:
S&P Global at BBB-
Fitch at BBB-
Moody’s at Baa2
In addition, each of the traded bonds have ratings from the credit ratings agencies.
Impairment on financial assets
In order to determine the impairment of financial assets, Harbour Energy uses either a general three-stage approach or the simplified
approach, according to IFRS 9, as applicable. In the case of financial assets for which the simplified approach does not apply, their
assessment takes place as at each reporting date to determine whether the credit risk on a financial instrument has increased significantly
since its initial recognition.
Trade accounts receivable, other receivables including cash at bank and deposits are subject to the expected credit loss model. This is
generally based on either externally provided or internal ratings for each debtor which, in certain cases, are updated based on recently
available information.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
179
To measure the expected credit losses on trade accounts receivable, Harbour Energy applies the simplified approach according to IFRS 9.
Accordingly, the loss allowance is measured at an amount equal to the lifetime expected credit losses. For trade accounts receivable, the
contractual payment term is usually 30 days. In deviation to this general rule, terms of up to one year are considered for the calculation
of expected credit losses due to different regional payment practices.
The loss allowance for other receivables, including cash at bank and deposits, is measured at an amount equal to the 12-month expected
credit loss. If the term of the financial instrument is shorter than 12 months, the lifetime expected credit loss is applied.
   
   
Additions from
           
   
business
   
Reclass
     
 
As at 1 January
combinations &
   
between
   
At 31 December
 
2024
joint arrangements
Additions
Reversals
categories
Disposals
FX
2024
 
$ million
$ million
$ million
$ million
$ million
$ million
$million
$ million
Trade receivables
               
Of which stage 2
1
22
(1)
(1)
20
Of which stage 3
2
 
22
(1)
(1)
20
Other receivables
               
Of which stage 2
1
Of which stage 3
2
2
2
 
2
2
Financial receivables
               
and bank balances
               
Of which stage 1
3
Of which stage 2
1
Of which stage 3
2
 
Total
24
(1)
(1)
22
1
The credit risk has increased significantly since initial recognition, the loss allowance for the financial assets is measured at an amount equal to the lifetime expected credit losses.
2
The financial asset is credit impaired.
3
The loss allowance for financial assets is measured at an amount equal to a 12-month expected credit loss.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities that are settled by
delivering cash or another financial asset. The Group monitors the amount of borrowings maturing within any specific period and expects
to meet its financing commitments from the operating cash flows of the business and existing committed lines of credit. The table below
summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
   
 
Within one year
1 to 2 years
2 to 5 years
Over 5 years
Total
As at 31 December 2024
$ million
$ million
$ million
$ million
$ million
Non-derivative financial liabilities
         
Bonds
1,173
629
2,049
2,127
5,978
Other loans
251
251
Trading contracts within the scope of IFRS 9 (settled physically)
54
8
62
Trade and other payables
1,548
30
1,578
Lease obligations
295
206
394
92
987
Total non-derivative financial liabilities
3,321
873
2,443
2,219
8,856
Derivative financial liabilities
         
Net-settled commodity derivatives
191
92
23
306
Net-settled foreign exchange derivatives
48
39
97
29
213
 
3,560
1,004
2,563
2,248
9,375
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
180
24. Financial risk factors and risk management
continued
   
As at 31 December 2023
Within one year
1 to 2 years
2 to 5 years
Over 5 years
Total
As restated
$ million
$ million
$ million
$ million
$ million
Non-derivative financial liabilities
         
Bond
28
28
528
584
Other loans
16
16
Trade and other payables
854
13
867
Lease obligations
250
186
340
121
897
Total non-derivative financial liabilities
1,148
227
868
121
2,364
Derivative financial liabilities
         
Net-settled commodity derivatives
197
87
284
Net-settled foreign exchange derivatives
 
1,345
314
868
121
2,648
The maturity profiles in the above tables reflect only one side of the Group’s liquidity position and will be recorded in the income statement
against future production and revenue which are not recognised on the balance sheet as assets. Interest bearing loans and borrowings and
trade payables mainly originate from the financing of assets used in the Group’s ongoing operations such as property, plant and equipment
and working capital such as inventories. These assets are considered part of the Group’s overall liquidity risk.
Financial instruments subject to offsetting, enforceable master netting arrangements
The following table shows the amounts recognised for financial assets and liabilities which are subject to offsetting arrangements on a gross
basis, and the amounts offset in the balance sheet.
   
 
Gross amounts of
   
 
recognised financial
 
Net amounts presented on
 
assets/(liabilities)
Amounts set off
the balance sheet
As at 31 December 2024
$ million
$ million
$ million
Commodity derivative assets
748
(596)
152
Commodity derivative liabilities
(1,223)
596
(627)
As at 31 December 2023
     
Commodity derivative assets
303
(37)
266
Commodity derivative liabilities
(321)
37
(284)
Derivatives are offset in the financial statements where the Group has a legally enforceable right and intention to offset.
25. Share capital
   
   
2024
 
2023
Issued and fully paid
Number
$ million
Number
$ million
Ordinary shares of 0.002p each
1,440,109,512
0
770,370,830
0
Ordinary non-voting shares of 0.002p each
251,488,211
0
Ordinary non-voting deferred shares of 12.4999p each
925,532,809
171
925,532,809
171
   
171
 
171
The rights and restrictions attached to the ordinary shares are as follows:
Dividend rights:
the rights of the holders of ordinary shares shall rank pari passu in all respects with each other in relation to dividends
Winding up or reduction of capital:
on a return of capital on a winding up or otherwise (other than on conversion, redemption or
purchase of shares) the rights of the holders of ordinary shares to participate in the distribution of the assets of the company available
for distribution shall rank pari passu in all respects with each other
Voting rights:
the holders of ordinary shares shall be entitled to receive notice of, attend, vote and speak at any general meeting
of the company
The rights and restrictions to the ordinary non-voting shares are as follows. Further information on the rights and obligations attached
to the non-voting ordinary shares is set out in the circular and prospectus published by the company on 12 June 2024.
Dividend rights:
each non-voting share will be entitled to receive an amount equal to a 13 per cent premium to the amount of any distribution
per ordinary share made by the company, whether by cash dividend, dividend in specie, scrip dividend, capitalisation issue or otherwise
Winding up or reduction of capital:
on a winding up or liquidation of the company, holders of non-voting ordinary shares will be paid
in priority to any other payment to holders of shares in the company
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
181
Voting rights:
a holder of non-voting ordinary shares shall not be entitled, in its capacity as a holder of such non-voting shares, to
receive notice of any general meeting of the company nor to attend, speak or vote at any such general meeting, unless the business of
the meeting includes the consideration of a resolution to: (a) wind up the company; or (b) re-register the company as a private company
Transferability:
the non-voting ordinary shares are not admitted to listing or trading. The non-voting ordinary shares may be transferred
to certain permitted transferees, in certain cases only with the consent of the company and in accordance with the terms of the non-
voting ordinary shares
Conversion rights:
a holder of non-voting ordinary shares will be entitled to convert at least 25,000,000 non-voting shares either: (i) in
conjunction with the sale of non-voting ordinary shares to market sale placees, which upon completion of such sale will be redesignated as
ordinary shares; or (ii) following the satisfaction of the conversion conditions (as defined in the terms of the non-voting ordinary shares). The
non-voting ordinary shares will be convertible into ordinary shares on a one for one basis except that following any allotment or issue of ordinary
shares by way of capitalisation of profits or reserves or any sub-division or consolidation of ordinary shares by the company (an adjustment
event), the non-voting ordinary shares will convert into such number of ordinary shares and the non-voting shareholder will receive the same
proportion of voting rights and entitlement to participate in distributions of the company, as nearly as practicable, as would have been the case had
no adjustment event occurred. Additionally, subject to certain exceptions, the company will be required to procure the conversion of the non-voting
ordinary shares into ordinary shares following: (i) the cancellation of the listing of the ordinary shares; and (ii) the acquisition of more than 50 per cent
of the voting rights of the company by any person (other than the holder of the non-voting shares and any of such holder’s concert parties)
The rights and restrictions attached to the non-voting deferred shares are as follows:
They will have no voting or dividend rights and, on a return of capital or on a winding up of the company, will have the right to receive
the amount paid up thereon only after holders of all ordinary shares have received, in aggregate, any amounts paid up on each ordinary
share plus £10 million on each ordinary share. The non-voting deferred shares will not give the holder the right to receive notice of, nor
attend, speak or vote at, any general meeting of the company
Issue of ordinary shares
During the year, the company issued 921,226,893 ordinary shares at a nominal value of 0.002 pence per share. This primarily consisted of
669,714,027 voting shares issued to BASF and 251,488,211 non-voting shares issued to LetterOne on completion of the acquisition. The company
also issued 24,655 (2023: 5,092) ordinary shares at a nominal value of 0.002 pence per share in relation to the exercise of SAYE awards.
The issue of the ordinary shares to BASF and LetterOne resulted in an amount of $3,457 million that has been recognised as a merger
reserve. These shares were issued at a share price of £2.86 per share, being the closing price of ordinary shares on the acquisition date
and translated at the spot pound sterling to US dollar rate on that date of £1:$1.3122. For further information see note 14.
Purchase and cancellation of own shares
During 2024, none of the company’s ordinary shares were repurchased or cancelled as the share buyback programme had been completed
by the end of the prior year. During 2023, the company repurchased 76,803,058 ordinary shares for a total consideration, including
transaction costs, of $249 million (recognised in retained earnings), as part of the share purchase programmes announced on 3 November
2022 and 9 March 2023, which concluded on 28 September 2023. All shares purchased had been cancelled.
Own shares
   
 
2024
2023
 
$ million
$ million
At 1 January
24
21
Purchase of ESOP trust shares
25
16
Release of shares
(13)
(13)
At 31 December
36
24
The own shares represent the net cost of shares in Harbour Energy plc purchased in the market or issued by the company into the
Harbour Energy plc Employee Benefit (ESOP) Trust. This ESOP Trust holds shares to satisfy awards under the Group’s share incentive
plans. At 31 December 2024, the number of ordinary shares of 0.002 pence each held by the trust was 9,223,652 (2023: 6,079,705).
26. Subordinated notes
On 22 February 2024, the bondholders of two series of subordinated resettable fixed rate notes (subordinated notes) in the aggregate principal
amount of €1,500 million approved a change in guarantor from Wintershall Dea AG to Harbour Energy plc which became effective upon completing
the Wintershall Dea acquisition transaction, at which point these bonds were ported to Harbour’s acquired subsidiary Wintershall Dea Finance 2 BV.
The subordinated notes are callable three months prior to the first reset date for the NC2026 series and six months prior to the first reset
date for the NC2029 series:
   
       
Nominal value
Nominal value
Carrying value
 
%
Reset date
Currency
€ million
$ million
$ million
Bond ISIN: XS2286041517
2.5%
2026
EUR
650
718
690
Bond ISIN: XS2286041947
3.0%
2029
EUR
850
939
873
Total
     
1,500
1,657
1,563
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
182
26. Subordinated notes
continued
   
 
2024
 
$ million
Fair value on acquisition
1,548
Accrued interest in the period to 31 December
15
 
1,563
Under IAS 32, subordinated notes are wholly classified as equity. The issued subordinated notes are recognised in equity at fair value, based
on the market prices of these instruments as of the acquisition date. Accrued interest payable to the subordinated notes investors increases
equity, whereas the distribution of interest payments reduces equity.
27. Share-based payments
The company currently operates a Long Term Incentive Plan (LTIP) for certain employees, a Share Incentive Plan (SIP), a Save As You Earn
(SAYE) scheme for UK-based employees, and an Expatriate SIP for expatriate employees only.
For the year ended 31 December 2024, the total cost recognised by the company for share-based payment transactions was $51 million
(2023: $46 million). A credit of $51 million (2023: $46 million) has been recorded in retained earnings for all equity-settled payments
of the company.
Like other elements of remuneration, this charge is processed through the time-writing system which allocates cost, based on time
spent by individuals, to various entities within the Group. Part of this cost is therefore recharged to the relevant subsidiary undertakings,
part is capitalised as directly attributable to capital projects and part is charged to the income statement as operating costs, pre-licence
exploration costs or general and administration costs.
Details of the various share incentive plans currently in operation are set out below:
2017 Long Term Incentive Plan (2017 LTIP)
Discretionary share awards are granted to employees under the company’s Long Term Incentive Plan (LTIP).
The following types of award have been granted under the 2017 LTIP:
Performance share awards (PSAs):
vesting is subject to a performance target, normally measured over a three-year period from
1 January based on total shareholder return (TSR) relative to (i) FTSE 100 index, and (ii) a bespoke peer group of oil and gas companies
and aligns to longer-term strategic objectives
Conditional share awards (CSAs):
vesting is only subject to continued employment
Deferred bonus share (DBS) awards:
certain employees are required to defer a portion of their annual bonus into shares which vest
over a three-year period subject to continued employment
All LTIP awards are granted in the form of nil-cost options or conditional share awards and therefore there is no exercise price payable
on the exercise of these awards.
For further details of the LTIP awards, including the performance conditions of the PSAs granted in 2024, please refer to the Directors’
remuneration report (pages 88 to 113).
The following table shows the movement in the number of LTIP awards:
   
 
2024
2023
 
million shares
million shares
Outstanding at 1 January
33.7
27.8
Granted
15.7
15.1
Vested
(2.6)
(8.7)
Forfeited
(9.3)
(0.5)
Outstanding at 31 December
1
37.5
33.7
1
This includes 0.7 million cash settled awards at 31 December 2024 (2023: 0.6 million), which are revalued using the year-end share price.
LTIP awards totalling 2.6 million shares were vested during the period (2023: 8.7 million). The weighted average remaining contractual life
of the LTIP awards at 31 December 2024 was 1.33 years (2023: 2.2 years).
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
183
Key assumptions used to calculate the fair value of awards
The fair value of PSAs which are subject to TSR conditions is determined using a Monte Carlo simulation. The fair value of all other awards
is calculated using the share price at the date of grant, adjusted for dividends not received during the vesting period.
The following table lists the inputs to the model used in respect of the PSAs granted during the financial year:
   
 
2024
2023
Share price at date of grant
£2.39–£3.22
£2.44 – £2.90
Dividend yield
0%
0%
Expected term
3 years
2.9 – 3.0 years
Risk free rate
4.1%-4.3%
3.3%–4.2%
Share price volatility of the company
47.0%-47.5%
49.2%–50.2%
The weighted average fair value of the PSA awards granted in 2024 was $1.64 (2023: $2.86).
Expected volatility was determined by reference to both the historical volatility of the company and the historical volatility of a group
of comparable quoted companies over a period in line with the expected term assumption.
Share Incentive Plan (SIP)
Under the Share Incentive Plan employees are invited to make contributions to buy partnership shares. If an employee agrees to buy
partnership shares the company currently matches the number of partnership shares bought with an award of shares (matching shares),
on a one-for-one basis. In 2024, 0.6 million matching shares were awarded to employees (2023: 0.3 million). The SIP matching shares
are valued based on the quoted share price on the grant date.
Save As You Earn (SAYE) scheme
Under the SAYE scheme, UK qualifying employees with one month or more continuous service can join the scheme. Employees can save
up to a maximum of £500 per month through payroll deductions for a period of three years, after which time they can acquire shares at
the option price, which is set at a discount of up to 20 per cent to the prevailing market price at the grant date, determined in accordance
with SAYE scheme rules. In 2024, 1 million SAYE options were granted (2023: 3.1 million).
The SAYE options outstanding at 31 December 2024 had exercise prices ranging from £2.32 to £2.72 (2023: £2.21 to £4.12) and
a weighted average remaining contractual life of 2.25 years (2023: 2.8 years).
28. Group pension schemes
In addition to state pension plans, most employees are granted company pension benefits from either defined contribution or defined benefit
plans. Benefits generally depend on the length of service, compensation and contributions and take into consideration the legal framework
of labour, tax and social security laws in the countries where the employing subsidiaries are located.
Defined contribution schemes
The Group primarily operates defined contribution retirement benefit schemes. The only obligation of the Group with respect to the retirement
benefit schemes is to make specified contributions. Payments to the defined contribution schemes are charged as an expense as they fall due.
Defined benefit plans
Germany
Employees of Harbour Energy companies in Germany participate in a capital market-oriented defined benefit pension scheme. This scheme
applies to all new employees joining Harbour Energy and is financed by employer and employee contributions and the performance of
the investment. Typically, Harbour Energy guarantees at least the sum of all employer and employee contributions paid and usually covers
these pension obligations with plan assets as part of an additional contractual trust arrangement (CTA). The option of building up
employee-financed retirement provisions through deferred compensation is also available to all employees of Harbour Energy companies
in Germany as part of the capital market-oriented defined benefit pension scheme. All other pension plans (including deferred compensation
plans) have been closed to new employees.
The defined benefit plan of BASF Pensionskasse VVaG was closed in 2004.
Some Harbour Energy companies in Germany only participate in the BASF group’s pension plans for periods of service already rendered
(past service). Some of the past service benefits financed via BASF Pensionskasse VVaG are subject to adjustments that must be borne
by its member companies to the extent that these cannot be borne by BASF Pensionskasse VVaG due to the regulations imposed by the
German supervisory authority. In addition to the former basic level of BASF Pensionskasse VVaG benefits, there are still defined pension
schemes, which are financed via pension provisions at the German Group companies. The benefits are largely based on modular plans. Only
employees who already participated in various existing deferred compensation plans before 2022 can continue to participate in these plans.
BASF SE does not provide sufficient plan information from BASF Pensionskasse regarding the allocation of assets to Harbour Energy for
year-end closing. As a result, the former participation in BASF Pensionskasse is accounted for as a multi-employer defined benefit plan
with insufficient information about the asset allocation and, therefore, as a defined contribution plan in accordance with IAS 19.36.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
184
28. Group pension schemes
continued
For further existing pension plans in Germany that are self-managed by Harbour Energy, assets were transferred to Willis Towers Watson Treuhand
GmbH within the framework of CTAs and to Willis Towers Watson Pensionsfonds AG as insolvency insurance. Willis Towers Watson Pensionsfonds AG falls
within the scope of the Act on Supervision of Insurance Undertakings and Oversight by the German Federal Financial Supervisory Authority (BaFin).
Insofar as a regulatory deficit occurs in the pension fund, supplementary payments are requested from the employer. Irrespective of the rules, the liability
of the employer remains in place. The bodies of Willis Towers Watson Treuhand GmbH and Willis Towers Watson Pensionsfonds AG are responsible for
ensuring that the funds under management are used in compliance with the contract and thus fulfil the requirements for their recognition as plan assets.
The defined benefit plans that are recognised as pension provisions mainly include pension promises and are hence subject to longevity risk.
Norway
The Harbour Energy Norge AS (formerly Wintershall Dea Norge) defined benefit plans have been closed to new employees since 1 January
2016. For Norwegian employees whose remaining length of service until retirement on 1 January 2016 was 15 years or less, a final salary
commitment continues to apply after the closure of the plan. The plans are partly funded via Nordea Liv AS. Employees who still had a
remaining length of service of more than 15 years on the date of 1 January 2016, and employees who joined the company after this date
are entitled to benefits under a defined contribution pension plan. Defined contribution plans are either secured with Nordea Liv AS or
unfunded and administered by Storebrand Pensjonstjenester on behalf of Harbour Energy Norge AS (formerly Wintershall Dea Norge AS).
Moreover, closed defined benefit plans are in place for former DEA Norge employees. These are secured with DNB ASA. Employees who still had 15
years or less until retirement on 1 January 2021 remained in the existing plans. All others were transferred to existing defined contribution plans.
UK
Harbour Energy operates a final salary defined benefit pension plan in the UK, primarily inflation-linked annuities based on an employee’s
length of service and final salary. The scheme is closed to new members. Further details of this plan have not been provided as the plan
is not material to the financial position or results of the Group.
Actuarial assumptions
The amount of the provision for defined benefit pension schemes was determined by actuarial methods based on the following key assumptions.
31 December 2024
Key assumptions (%)
Germany
Norway
Discount rate
3.4
3.1
Pension growth
2.3
1.8
The assumptions used to determine the present value of the entitlements as at 31 December 2024 are used in the following fiscal year
to determine the expenses for pension plans.
The valuation of the defined benefit obligation is generally performed using the most recent actuarial mortality tables as at 31 December 2024.
Actuarial mortality tables as at 31 December 2024
Germany
Heubeck Richttafeln 2018 G
Norway
K2013
Provision for pensions
Defined benefit
obligations
Plan assets
Total
$ million
$ million
$ million
$ million
On acquisition
Current service costs
3
3
Interest expense/(income)
5
(5)
8
(5)
3
Remeasurement
Return on plan assets, excluding amounts already recognised in interest income
Actuarial gains/losses
– of which effect of changes in financial assumptions
10
10
– of which effect of experience adjustments
(3)
(3)
7
7
Currency effect
(31)
28
(3)
Employer contribution to the funded plans
(1)
(1)
Benefit payments
(9)
9
Change of scope
493
(453)
40
As at 31 December 2024
468
(422)
46
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
185
The present value of the defined benefit obligations less plan assets measured at fair value results in the net defined benefit obligation
arising from funded and unfunded plans and is recognised as pension provision on the balance sheet. Of the present value of defined
benefit obligations, $98 million relate to benefit obligations in Germany, $320 million to benefit obligations in Corporate and $49 million
to benefit obligations in Norway.
Domestic company pensions are subject to an obligation to review for adjustments every three years pursuant to Section 16 of the German
Occupational Pensions Act (BetrAVG). Additionally, some commitments grant annual pension adjustments, which may exceed the legally
mandated adjustment obligation.
The weighted average duration of the pension obligations is 20 years in Germany, 10 years for Corporate and 15 years in Norway.
Sensitivity analysis of defined benefit obligations
An increase or decrease in the discount rate and pension growth would have the following impact on the present value of the defined
benefit obligations:
Change in actuarial assumptions
   
 
Impact on defined benefit obligations
 
31 December 2024
31 December 2023
 
$ million
$ million
Discount rate
   
Increase of 0.5 percentage points
(26)
Reduction of 0.5 percentage points
29
Pension growth
   
Increase of 0.5 percentage points
19
Reduction of 0.5 percentage points
(18)
Plan assets
The investment policy in Germany is based on detailed asset liability management (ALM) studies. Portfolios are identified that can achieve
the best target return within a given risk budget. From these efficient portfolios, one is selected, and the strategic asset allocation is
determined. The strategic asset allocation consists of two main elements. The first one is used to hedge fluctuations. This involves the
use of capital market instruments that hedge the financial risks arising from the valuation of pension obligations. The second part of the
allocation is used to generate income and for diversification purposes. The broadly diversified portfolio includes investments in bonds,
equities, real estate and other asset classes. The assets are continuously monitored and managed from a risk and return perspective.
Composition of plan assets (fair values)
   
     
31 December 2024
   
Of which has
 
Of which has
 
Germany
an active
Norway
an active
 
$ million
market
$ million
market
Assets held in insurance company
3
22
100%
Specialised funds
397
100%
 
400
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
186
29. Notes to the statement of cash flows
Net cash flows from operating activities consist of:
   
   
2023
 
2024
As restated
 
$ million
$ million
Profit before taxation
1,219
616
Adjustments to reconcile profit before tax to net cash flows
   
Finance cost, excluding foreign exchange
602
363
Finance income, excluding foreign exchange
(55)
(104)
Depreciation, depletion and amortisation
1,745
1,449
Net impairment of property, plant and equipment
352
176
Impairment of goodwill
25
Impairment of right-of-use asset
20
Share-based payments
51
20
Decommissioning payments
(284)
(268)
Fair value movements on derivatives
(68)
Changes in provisions
(31)
Exploration costs written-off
173
57
Movement in realised cash flow hedges not yet settled
(31)
(207)
Unrealised foreign exchange (gain)/loss
(116)
49
Working capital adjustments
   
Decrease)/(increase) in inventories
39
(52)
(Increase)/decrease in trade and other receivables
(32)
525
Decrease in trade and other payables
(470)
(61)
Net tax payments
(1,499)
(438)
Net cash inflow from operating activities
1,615
2,150
Reconciliation of net cash flow to movement in net borrowings
   
   
2023
 
2024
As restated
 
$ million
$ million
Proceeds from drawdown of RBL facility
(178)
(660)
Proceeds from Euro bonds
(1,728)
Proceeds from RCF
(2,225)
Proceeds from bridge facility
(1,500)
Repayment of RBL facility
178
1,435
Repayment of bridge facility
1,500
Repayment of RCF
1,975
Repayment of EFF loan
11
Repayment of financing arrangement
17
21
Bond debt arising on business combination
1
(3,038)
Financing arrangement interest payable
(1)
(3)
Arrangement fees and related costs on RBL capitalised
34
Arrangement fees and related costs on bonds capitalised
11
Arrangement fees and related costs on RCF capitalised
34
Arrangement fees and related costs on bridge facility capitalised
13
Amortisation of arrangement fees and related costs capitalised
(102)
(48)
Currency translation adjustment on Euro bonds
263
Movement in total borrowings
(4,781)
790
Cash acquired on business combination
748
Movement in cash and cash equivalents
(229)
(214)
(Increase)/decrease in net borrowings in the year
(4,262)
576
Opening net borrowings
(162)
(738)
Closing net borrowings
(4,424)
(162)
1
Net of capitalised arrangement fees and related costs of $276 million.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
187
Analysis of net borrowings
   
2023
 
2024
As restated
 
$ million
$ million
Cash and cash equivalents
805
286
RCF
(218)
Bonds
(5,011)
(493)
Net debt
(4,424)
(207)
Financing arrangement
(16)
Closing net borrowings
(4,424)
(223)
Non-current assets
1
42
Current assets
1
19
Closing net borrowings after unamortised fees
1
(4,424)
(162)
1
At 31 December 2023, $61 million of fees associated with the RBL facility were recognised in debtors.
The carrying values on the balance sheet are stated net of the unamortised portion of issue costs and bank fees of $284 million of which
$32 million relates to the RCF and $252 million is netted against the bonds (Dec 2023: $68 million of which $61 million related to the RBL,
which was recognised in assets and $7 million related to the bond, which was netted off against the borrowings).
30. Related party disclosures
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not
disclosed in this note.
BASF and LetterOne have been classified as related parties because they are substantial shareholders holding 669.7 million of voting ordinary
shares and 251.5 million of non-voting ordinary shares, respectively. The BASF shareholding represents 46.5 per cent of voting ordinary shares.
BASF is entitled to dividends as per note 31 which, whilst denominated in pound sterling will, specifically for BASF, will be paid in US dollars.
Compensation of key management personnel of the Group
Remuneration of key management personnel, including directors of the Group, is shown below:
 
2024
2023
 
$ million
$ million
Salaries and short-term employee benefits
16
13
Payments made in lieu of pension contributions
1
1
Termination benefits
1
Pension benefits
 
18
14
31. Distributions made and proposed
A final dividend of 13 cents per ordinary share in relation to the year ended 31 December 2023 was paid on 22 May 2024 pursuant
to shareholder approval received on 9 May 2024.
An interim dividend of 13 cents per ordinary share in relation to the half year ended 30 June 2024 was paid on 25 September 2024.
 
2024
2023
 
$ million
$ million
Cash dividends on ordinary shares declared and paid
   
Final dividend for 2023: 13 cents per share (2022: 12 cents per share)
100
99
Interim dividend for 2024: 13 cents per share (2023: 12 cents per share)
99
91
 
199
190
Proposed dividends on ordinary shares
   
Final dividend for 2024: 13.19 cents per share (2023: 13 cents per share)
227.5
100
Proposed dividends on ordinary shares are subject to approval at the Annual General Meeting and are not recognised as a liability as at
31 December.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
188
32. Events after the reporting period
On 23 January 2025 Harbour announced it had signed a Sale and Purchase Agreement to sell its Vietnam business, which includes the
53.125 per cent equity interest in the Chim Sáo and Dua production fields, to EnQuest for $84 million. The effective date is 1 January 2024
with completion targeted during 2025. This agreement resulted in the Vietnam business unit being classed as asset held for sale as at
31 December 2024.
On 3 March 2025, the Finance Act 2025 was substantively enacted following its third reading in the UK Parliament. While the substantive
enactment has no implications for the current accounting period, it confirms that the extension of the Energy Profits Levy to 31 March 2030
will be reflected in the Group’s results for the interim period to 30 June 2025. If the Finance Act 2025 had been substantively enacted at
the balance sheet date, the deferred tax liability at the end of the period would have increased by $306 million (further details are provided
in note 8).
33. Group information
Subsidiary undertakings of the company which were all wholly owned at 31 December 2024 were:
   
Name of company
Area of operation
Country of incorporation
Main activity
Chrysaor (U.K.) Alpha Limited
17
UK
UK
Exploration, production, and development
Chrysaor (U.K.) Beta Limited
17
UK
UK
Decommissioning activities
Chrysaor (U.K.) Sigma Limited
17
UK
UK
Exploration, production, and development
Chrysaor (U.K.) Theta Limited
17
UK
UK
Exploration, production, and development
Chrysaor CNS Limited
17
UK
UK
Exploration, production, and development
Chrysaor Developments Limited
17
UK
UK
Decommissioning activities
Chrysaor E&P Limited
17
UK
UK
Intermediate holding company
Chrysaor Holdings Limited
7
UK
Cayman Islands
Intermediate holding company
Chrysaor Limited
17
UK
UK
Exploration, production, and development
Harbour Energy Marketing Limited
17
UK
UK
Gas trading
Chrysaor North Sea Limited
17
UK
UK
Exploration, production, and development
Chrysaor Petroleum Company U.K. Limited
17
UK
UK
Exploration, production, and development
Chrysaor Petroleum Limited
17
UK
UK
Decommissioning activities
Chrysaor Production (U.K.) Limited
17
UK
UK
Exploration, production, and development
Chrysaor Production Holdings Limited
17
UK
UK
Intermediate holding company
Chrysaor Resources (Irish Sea) Limited
17
UK
UK
Exploration, production, and development
DEA Cyrenaica GmbH
8
Libya
Germany
Exploration, production, and development
DEA E&P GmbH
8
Germany
Germany
Exploration, production, and development
DEA North Africa/Middle East GmbH
8
North Africa
Germany
Exploration, production, and development
DEM México Erdoel, S.A.P.I. de C.V.
14
Mexico
Mexico
Intermediate holding company
E&A Internationale Explorations-und Produktions GmbH
20
Germany
Germany
Exploration, production, and development
Ebury Gate Limited
9
Guernsey
Guernsey
Risk mitigation services
EnCore Oil Limited
17
UK
UK
Intermediate holding company
FP Mauritania A BV
11
Mauritania
Netherlands
Decommissioning activities
FP Mauritania B BV
11
Mauritania
Netherlands
Decommissioning activities
Harbour Energy Bloque 7, S.A. de C.V. (formerly Premier Oil
     
Exploration and Production Mexico S.A.de C.V.)
15
Mexico
Mexico
Exploration, production, and development
Harbour Energy DH GmbH
21
Germany
Germany
Intermediate holding company
Harbour Energy Finance Limited
17
UK
UK
Financing company
Harbour Energy Netherlands Holdings BV
11
Netherlands
Netherlands
Intermediate holding company
Harbour Energy Norge AS (formerly Wintershall Dea Norge AS)
12,22
Norway
Norway
Exploration, production, and development
Harbour Energy Services Limited
17
UK
UK
Service company
Harbour Energy Unidad Zama, S. de R.L. de C.V. (formerly
     
Sierra O&G Exploration y Producción, S. de R.L. de C.V.)
14
Mexico
Mexico
Exploration, production, and development
Izta Energia, S. de R.L. de C.V.
14
Mexico
Mexico
Intermediate holding company
Premier Oil (Vietnam) Limited
4
Vietnam
British Virgin Islands
Exploration, production, and development
Premier Oil Aberdeen Services Limited
17
UK
UK
Service company
Premier Oil and Gas Services Limited
17
UK
UK
Service company
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
189
Name of company
Area of operation
Country of incorporation
Main activity
Premier Oil Andaman I Limited
17
Indonesia
UK
Exploration, production, and development
Premier Oil Andaman Limited
17
Indonesia
UK
Exploration, production, and development
Premier Oil Barakuda Limited
17
Indonesia
UK
Exploration, production, and development
Premier Oil E&P Holdings Limited
17
UK
UK
Intermediate holding company
Premier Oil E&P UK EU Limited
17
UK
UK
Exploration, production, and development
Premier Oil E&P UK Limited
17
UK
UK
Exploration, production, and development
Premier Oil Exploration (Mauritania) Limited
13
Mauritania
Jersey
Decommissioning activities
Premier Oil Group Holdings Limited
1,17
UK
UK
Intermediate holding company
Premier Oil Group Limited
19
UK
UK
Intermediate holding company
Premier Oil Holdings Limited
17
UK
UK
Intermediate holding company
Premier Oil Mauritania B Limited
13
Mauritania
Jersey
Decommissioning activities
Premier Oil Mexico Holdings Limited
17
UK
UK
Intermediate holding company
Premier Oil Mexico Investments Limited
17
UK
UK
Intermediate holding company
Premier Oil Mexico Recursos S.A. de C.V.
15
Mexico
Mexico
Exploration, production, and development
Premier Oil Natuna Sea BV
11
Indonesia
Netherlands
Exploration, production, and development
Premier Oil Overseas BV
11
Netherlands
Netherlands
Intermediate holding company
Premier Oil South Andaman Limited
17
Indonesia
UK
Exploration, production, and development
Premier Oil Tuna BV
11
Indonesia
Netherlands
Exploration, production, and development
Premier Oil UK Limited
19
UK
UK
Exploration, production, and development
Premier Oil Vietnam Offshore BV
11
Vietnam
Netherlands
Exploration, production, and development
Servicios Unidad PWTH S. De R.L. de C.V.
14
Mexico
Mexico
Service company
Sierra Blanca P&D, S. de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Sierra Coronado E&P, S. de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Sierra Nevada E&P, S. de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Sierra Offshore Exploration, S. de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Sierra Oil & Gas Holdings, L.P.
6
Mexico
Canada
Intermediate holding company
Sierra Oil & Gas S.de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Sierra Perote E&P, S. de R.L de C.V.
14
Mexico
Mexico
Exploration, production, and development
Wintershall Dea Algeria GmbH
8
Algeria
Germany
Exploration, production, and development
Wintershall Dea Argentina S.A.
2
Argentina
Argentina
Exploration, production, and development
Wintershall Dea Deutschland GmbH
8
Germany
Germany
Exploration, production, and development
Wintershall Dea Finance 2 BV (1)
11
Netherlands
Netherlands
Financing company
Wintershall Dea Finance BV (1)
11
Netherlands
Netherlands
Financing company
Wintershall Dea Global Holding GmbH
8
Germany
Germany
Exploration, production, and development
Wintershall Dea Global Support
11
Netherlands
Netherlands
Service company
Wintershall Dea Holding GmbH
8
Germany
Germany
Exploration, production, and development
Wintershall Dea Insurance Limited
10
Guernsey
Guernsey
Risk mitigation services
Wintershall Dea International GmbH
8
Germany
Germany
Exploration, production, and development
Wintershall Dea Marketing Services GmbH
20
Germany
Germany
Distribution, transportation and trade
Wintershall Dea Mexico Holding BV
11
Mexico
Netherlands
Intermediate holding company
Wintershall Dea Mexico Holdings GP Ltd
5
Mexico
Canada
Intermediate holding company
Wintershall Dea México, S. de R.L. de C.V.
14
Mexico
Mexico
Exploration, production, and development
Wintershall Dea Middle East GmbH
20
United Arab Emirates
Germany
Exploration, production, and development
Wintershall Dea Nederland BV
11
Netherlands
Netherlands
Servicing and financing company
Wintershall Dea Nile GmbH
8
Egypt
Germany
Exploration, production, and development
Wintershall Dea South East Asia GmbH
20
Germany
Germany
Exploration, production, and development
Wintershall Dea Suez GmbH
8
Egypt
Germany
Exploration, production, and development
Wintershall Dea Technology Ventures GmbH
20
Germany
Germany
Investment company
Wintershall Dea TSC GmbH & Co.KG
8
Germany
Germany
Research and development
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
190
33. Group information
continued
Name of company
Area of operation
Country of incorporation
Main activity
Wintershall Dea TSC Management GmbH
20
Germany
Germany
Research and development
Wintershall Dea Vermögensverwaltungs gesellschaft mbH
20
Germany
Germany
Intermediate holding company
Wintershall Dea WND GmbH
8
Egypt
Germany
Exploration, production, and development
Wintershall Petroleum (E&P) BV
11
Netherlands
Netherlands
Exploration, production, and development
Chrysaor (U.K.) Britannia Limited
17
UK
Dormant company
Chrysaor (U.K.) Lambda Limited
16
Ireland
Dormant company
DEA Trinidad & Tobago GmbH
8
Germany
Non-trading
EnCore (NNS) Limited
17
UK
Non-trading
Harbour Energy Argentina Limited
17
UK
Dormant company
Harbour Energy Central Andaman Limited
(formerly Premier Oil B Limited)
17
UK
Dormant company
Harbour Energy Developments Limited
17
UK
Dormant company
Harbour Energy Production Limited
17
UK
Dormant company
Harbour Energy Secretaries Limited
17
UK
Dormant company
Premier Oil (EnCore Petroleum) Limited
17
UK
Non-trading
Premier Oil ANS Limited
17
UK
Non-trading
Premier Oil do Brasil Petroleo e Gas Ltda
3
Brazil
Dormant company
Premier Oil Exploration Limited
19
UK
Non-trading
Premier Oil Far East Limited
17
UK
Non-trading
Premier Oil ONS Limited
17
UK
Dormant company
Premier Oil Pakistan Offshore BV
11
Netherlands
Dormant company
Premier Oil Vietnam 121 Limited
17
UK
Non-trading
Viking CCS Limited
17
UK
Dormant company
Chrysaor (U.K.) Delta Limited
17
UK
Liquidation
Chrysaor (U.K.) Eta Limited
17
UK
Liquidation
Chrysaor (U.K.) Zeta Limited
17
UK
Liquidation
Chrysaor Production Limited
18
UK
Liquidation
Chrysaor Resources (UK) Holdings Limited
17
UK
Liquidation
Premier Oil ANS Holdings Limited
18
UK
Liquidation
Premier Oil Congo (Marine IX) Limited
13
Jersey
Liquidation
Premier Oil Exploration ONS Limited
18
UK
Liquidation
Premier Oil Finance (Jersey) Limited
1,13
Jersey
Liquidation
Note:
1
Held directly by the company. All other companies are held through a subsidiary undertaking.
2
Registered office – Ingeniero Della Paolera 265 Piso 14 Ciudad de Buenos Aires, C1001ADA Argentina.
3
Registered office – Rua Lauro Müller, 116 – Sala 2006, Torre Rio Sul, Shopping, 20º andar, Botafogo, Rio de Janeiro – RJ – CEP: 22.290-906, Brazil.
4
Registered office – Commerce House, Wickhams Cay 1, Road Town, Tortola, VG1110, British Virgin Islands.
5
Registered office – 181 Bay Street, Suite 2100, Toronto, ON M5J 2T3, Canada.
6
Registered office – 44 Chipman Hill, Suite 1000, Saint John, NB E2L 2A9, Canada.
7
Registered office – Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
8
Registered office – Hamburg, Germany. Business address – Am Lohsepark 8, 20457 Hamburg, Germany.
9
Registered office – Level 5, Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 1EJ.
10
Registered office – Level 3,Mill Court, La Charroterie, St Peter Port, Guernsey, GY1 4ET.
11
Registered office – Lange Kleiweg 56H, 2288 GK, Rijswijk, Netherlands.
12 Registered office – Jåttåflaten 27, 4020 Stavanger, Norway.
13 Registered office – 2
nd
Floor, Lime Grove House, Green Street, St. Helier, JE2 4UB, Jersey.
14
Registered office – Campos Eliseos 345, floor 12, Polanco V Seccion, Mexico City, CP 11560, Mexico.
15
Registered office – Presidente Masaryk 111, Piso 1, Polanco V Seccion, Mexico City, CP 11560, Mexico.
16
Registered office – Riverside One, Sir John Rogerson’s Quay, Dublin 2, Ireland.
17
Registered office – 151 Buckingham Palace Road, London, SW1W 9SZ, United Kingdom.
18
Registered office – C/O Teneo Financial Advisory Limited The Colmore Building, 20 Colmore Circus Queensway, Birmingham, B4 6AT, United Kingdom.
19 Registered office – 4
th
Floor, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN, United Kingdom.
20
Registered office – Kassel, Germany. Business address – Am Lohsepark 8, 20457 Hamburg, Germany.
21
Registered office – Frankfurt am Main, Germany. Business address – Am Lohsepark 8, 20457 Hamburg, Germany.
22
The companies Harbour Energy Norge AS and Wintershall Dea Norge AS merged in December 2024.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
191
Joint operations and investments
Companies that are not wholly owned or controlled by the Group were:
   
Name of company
Effective % ownership
Registered office address
Luna Carbon Storage ANS
60
Jåttåflaten 27, 4020, Stavanger, Norway
Havstjerne ANS
60
Jåttåflaten 27, 4020, Stavanger, Norway
Disouq Petroleum Company
50
Plot No. 188 (Dana Gas Building), City Center, 5
th
Settlement, New Cairo, Egypt
JV East Damanhur Gas Company
50
Plot No. 188 (Dana Gas Building), City Center, 5
th
Settlement, New Cairo, Egypt
Erdgas Münster GmbH
33.7
Johann-Krane-Weg 46, 48149, Münster, Germany
Wellstarter AS
24.4
Stiklestadveien 3, 7041, Trondheim, Norway
AMBARtec AG
24.4
Erna-Berger-Str. 17, 01097, Dresden, Germany
Earth Science Analytics AS
13.5
Strandveien 37, 1366, Lysaker, Norway
Gasoducto Cruz del Sur S.A.
10
La Cumparsita 1373 office 402, 11200, Montevideo, Uruguay
HiiROC Limited
9.6
Number 22 Mount Ephraim, Tunbridge Wells, TN4 8AS, United Kingdom
Gas Links S.A.
5.1
Don Bosco 3672 6
th
floor, C1206ABF, City of Buenos Aires, Argentina
Joint operations that are not managed through separate companies are mainly located in Norway, the UK, Germany, Mexico and Argentina.
COMPANY BALANCE SHEET
Harbour Energy plc
Annual Report & Accounts 2024
192
AS AT 31 DECEMBER 2024
   
2024
2023
 
Note
$ million
$ million
Assets
     
Non-current assets
     
Investments in subsidiaries
3
6,065
2,238
Long-term employee benefit plan surplus
7
1
Long-term receivables
4
2,056
1,924
Total non-current assets
 
8,122
4,162
Current assets
     
Trade and other receivables
4
30
22
Total current assets
 
30
22
Total assets
 
8,152
4,184
Current liabilities
     
Trade and other payables
5
842
54
Total current liabilities
 
842
54
Non-current liabilities
     
Borrowings
6
496
493
Other financial liabilities
5
52
Long-term employee benefit plan deficit
7
1
1
Total non-current liabilities
 
549
494
Total liabilities
 
1,391
548
Net assets
 
6,761
3,636
Equity and reserves
     
Share capital
9
171
171
Merger reserve
9
3,457
Retained earnings
 
3,125
3,457
Other reserves
 
8
8
Total equity and reserves
 
6,761
3,636
Loss for the year ending 31 December 2024 was $160 million (2023: $36 million profit).
The financial statements, including the notes, of Harbour Energy plc (registered number SC234781) on pages 192 to 196 were approved
and authorised for issue by the board of directors on 5 March 2025 and signed on its behalf by:
Alexander Krane
Chief Financial Officer
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
COMPANY STATEMENT OF CHANGES IN EQUITY
Harbour Energy plc
Annual Report & Accounts 2024
193
Capital
Share
Merger
redemption
Retained
Total
capital
reserve
1
reserve
earnings
2
equity
$ million
$ million
$ million
$ million
$ million
At 1 January 2023
171
8
3,829
4,008
Profit for the year
36
36
Other comprehensive income
Total comprehensive income
36
36
Purchase and cancellation of own shares
(249)
(249)
Share-based payments
46
46
Purchase of ESOP Trust shares
(15)
(15)
Dividends paid
(190)
(190)
At 31 December 2023
171
8
3,457
3,636
Loss for the year
(160)
(160)
Other comprehensive income
1
1
Total comprehensive loss
(159)
(159)
Issue of new shares
3,457
3,457
Share-based payments
51
51
Purchase of ESOP Trust shares
(25)
(25)
Dividends paid
(199)
(199)
At 31 December 2024
171
3,457
8
3,125
6,761
1
The increase in the merger reserve represents the difference between the fair value and nominal value of the shares issued as consideration for the acquisition of the Wintershall Dea assets.
2
Includes $1.65 billion non-distributable reserves restricted until 31 March 2028.
FOR THE YEAR ENDED 31 DECEMBER 2024
NOTES TO THE COMPANY FINANCIAL STATEMENTS
Harbour Energy plc
Annual Report & Accounts 2024
194
1. Material accounting policies
The separate financial statements of the company are presented as required by the Companies Act 2006. The company meets the definition
of a qualifying entity under Financial Reporting Standard 100 (FRS 100) issued by the Financial Reporting Council (FRC). These financial
statements have been prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions available under that standard in relation
to accounting standards issued but not yet effective or implemented, share-based payment information, financial instruments, capital
management, presentation of comparative information in respect of certain assets, presentation of a cash flow statement and certain
related party transactions. Where required, the equivalent disclosures are given in the consolidated financial statements.
The financial statements have been prepared on a going concern basis. Further information relating to the going concern assumption
is provided in the Financial review on page 32. Key sources of estimation uncertainty disclosure are provided in the accounting policies
and in relevant notes to the consolidated financial statements as applicable. Details of the company’s share-based payment schemes are
provided in note 27 of the consolidated financial statements.
The financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are the same as those
set out on pages 135 to 150 to the consolidated financial statements except that investments in subsidiaries are stated at cost less, where
appropriate, provisions for impairment.
2. (Loss)/profit for the year
As permitted by section 408 of the Companies Act 2006, the company has elected not to present its own profit and loss account
for the year. The company reported a loss for the financial year ended 31 December 2024 of $160 million (2023: $36 million profit).
Other comprehensive income for the year was $1 million (2023: $nil).
The auditors’ remuneration for audit and other services is disclosed in note 5 to the consolidated financial statements.
3. Investments in subsidiaries
2024
2023
Net book value
$ million
$ million
At 1 January
2,238
2,302
Additions
4,089
Transfers
(262)
Impairment
(64)
At 31 December
6,065
2,238
As part of the Wintershall Dea acquisition the company acquired 5 per cent shares in Wintershall Dea Holding GmbH and designated
Harbour Energy DH GmbH as the purchaser of the remaining 95 per cent. On the same day, these 5 per cent shares were contributed to
Harbour Energy Netherlands Holdings BV by way of Harbour Energy Netherlands Holdings BV increasing its share premium without issuing
further shares to Harbour Energy plc. On the same day, Harbour Energy Netherlands Holdings BV contributed the 5 per cent shares to
Harbour Energy DH GmbH by way of Harbour Energy DH GmbH increasing its capital reserve without issuing further shares to
Harbour Energy Netherlands Holdings BV.
On 4 September 2024, Harbour Energy plc acquired the shareholdings of Wintershall Dea Finance BV and Wintershall Dea Finance 2 BV.
In October 2024, a further contribution was made to Wintershall Dea Finance BV.
As at 31 December, 2024, the market capitalisation of the company was less than the company’s carrying value of its investment in its
subsidiaries. Therefore, an impairment test was performed to determine whether recoverable amount exceeded the cost of investment.
Recoverable amount was assessed by reference to fair value less costs of disposal. This was calculated by comparing the cost of investment
with the Group’s market capitalisation (Level 1 under IFRS 13 fair value hierarchy), adjusted to reflect a control premium. In determining the
premium and costs of disposal, available data from recent market transactions in comparable industries, conducted at arm’s length for
similar assets, have been taken into account. This resulted in a recoverable amount exceeding the cost of investment. As fair value less
costs of disposal exceeded cost, no separate value in use calculation was undertaken. Given the impairment recognised in 2022, this
surplus was further assessed for reversal however was not found to be robust when evaluated with reference to reasonable downside
sensitivities. As part of this assessment, it was noted that a 10 per cent decrease in the share price would result in a $500 million impairment.
The impairment of $64 million in the prior year reflected an investment in a subsidiary that planned to enter liquidation during 2024.
A list of all investments in subsidiaries held at 31 December 2024, including the name and type of business, the country of operation
and the country of incorporation or registration, is given in note 33 to the consolidated financial statements.
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
195
4. Receivables
2024
2023
Current
$ million
$ million
Amounts owed by subsidiary undertakings in respect of taxation
14
Trade debtors
1
Other debtors
11
Prepayments
5
21
30
22
Non-current
Amounts owed by subsidiary undertakings
1,2
2,052
1,924
Other long-term receivables
4
2,056
1,924
1
Amounts owed by subsidiary undertakings include non-interest bearing loans that are repayable on demand, although the company has confirmed that it has no current intention
to call on the loans until at least 12 months from the date of the approval of these financial statements.
2
The above carrying values reflect an impairment provision required under IFRS 9, which was calculated using the Group’s 12-month probability of default. The amounts owed by
subsidiary undertakings of $2,061 million (2023: $1,933 million) incurred an impairment provision of $9 million (2023: $9 million) resulting in the carrying amounts being $2,052 million
(2023: $1,924 million) at year end.
The carrying values of the company’s receivables approximate their fair value.
5. Trade and other payables
2024
2023
Current
$ million
$ million
Amounts owed to subsidiary undertakings
822
Amounts owed to subsidiary undertakings in respect of taxation
8
Other creditors
1
Accruals
19
46
842
54
Non-current
Other financial liabilities
52
52
Other financial liabilities refer to the contingent consideration agreed upon with the previous owners of the Wintershall Dea assets.
Further details of these items are disclosed in note 14 of the consolidated financial statements.
The carrying values of the company’s payables approximate their fair value.
6. Borrowings
2024
2023
Book value
Fair value
Book value
Fair value
$ million
$ million
$ million
$ million
Bond
(496)
(499)
(493)
(487)
In October 2021, the company issued a $500 million bond under Rule 144A which has a tenor of five years to maturity. The coupon was set
at 5.50 per cent and interest is payable semi-annually. Further details can be found in note 22 of the consolidated financial statements.
The fair value of the bond is within level 2 of the fair value hierarchy and has been estimated by discounting future cash flows by the relevant
market yield curve at the balance sheet date.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
CONTINUED
Harbour Energy plc
Annual Report & Accounts 2024
196
7. Long-term employee benefit plans
Defined benefit schemes
The company operates a final salary defined benefit pension plan in the UK, primarily inflation-linked annuities based on an employee’s
length of service and final salary. The scheme is closed to new members. The plan is a UK Tax Authority registered pension plan and is
subject to standard UK pension and tax laws. Details on the benefits provided by the plan are set out in the Trust Deed and Rules dated
16 October 2008 (as amended).
The plan’s assets are held in a separate trustee-administered fund to meet long-term pension liabilities to beneficiaries. The trustee of the plan
is required to act in the best interest of the beneficiaries. The appointment of trustee directors is determined by the trust documentation.
The trustee of the plan invests assets in line with the Statement of Investment Principles. The Statement of Investment Principles has been
established taking into consideration the liabilities of the plan and the investment risk the trustee is willing to accept.
Under the Scheme Funding regime introduced by the Pensions Act 2004, the trustee is required to carry out regular actuarial valuations of the
plan, establish a schedule of contributions and, when there is a shortfall, a recovery plan. Scheme funding valuations are carried out at least
every three years. Approximate funding updates are produced annually in years where a full scheme funding valuation is not completed.
The defined benefit pension plan exposes the company to actuarial risk, such as longevity risk, interest rate risk, salary risk, investment
market risk and currency risk.
Further details of this plan have not been provided as the plan is not material to the financial position or results of the company.
The company is also paying an unfunded pension to a former director in regard to which annual increase and a revisionary spouse’s
pension apply as to pensions paid under the plan.
8. Commitments and guarantees
At the year-end date, the company (together with certain subsidiary undertakings) guaranteed the Group’s principal borrowing facilities,
which comprise:
$3 billion revolving credit facility agreement, of which $1.75 billion is available for drawing letters of credit;
€3 billion senior bonds acquired as a result of the business combination;
senior unsecured bonds of $500 million, €700 million and €900 million;
subordinated notes of €650 million and €850 million; and
$675 million (£540 million) of surety bond capacity for the purposes of posting decommissioning security.
9. Share capital and merger reserve
Further details of these items are disclosed in note 25 of the consolidated financial statements.
10. Dividends
Further details of these items are disclosed in note 31 of the consolidated financial statements.
INDEPENDENT ASSURANCE STATEMENT
Scope
Ernst & Young LLP (EY) was engaged by Harbour Energy plc (the
company, Harbour) to perform a limited assurance engagement in
accordance with International Standard on Assurance Engagements
(ISAE) 3000 (Revised), here after referred to as the ‘engagement’,
to report on selected Environmental and Social performance data
indicated with a ‘^’ (the Subject Matter) contained within Harbour’s
Annual Report for the year ended 31 December 2024 (the Report).
The Subject Matter is as follows:
Safety metrics: page 41
GHG and energy metrics: page 52
Effluent spills and waste metrics: page 53
Social metrics: page 55
Other than as described in the preceding paragraph, which sets out the
scope of our engagement, we did not perform assurance procedures
on the remaining information included in the Report, and accordingly,
we do not express a conclusion on this information.
Criteria applied by Harbour Energy plc
In preparing the Subject Matter, Harbour applied The Global Reporting
Initiative Standard, GRI 11: Oil and Gas Sector 2021 (including
associated GRI Topic Standard Disclosures) (the Criteria).
Conclusion
Based on our procedures and the evidence obtained, we are not
aware of any material modifications that should be made to the
Subject Matter for the year ended 31 December 2024 in order
for it to be in accordance with the Criteria.
Basis for our conclusion
We conducted our engagement in accordance with International
Standard on Assurance Engagements 3000 (Revised), Assurance
Engagements Other than Audits or Reviews of Historical Financial
Information and International Standard on Assurance Engagements
3410 – Assurance Engagements on Greenhouse Gas Statements
(ISAE 3410), as promulgated by the International Auditing and
Assurance Standards Board (IAASB) and the terms of our
engagement letter dated 20 November 2024, as agreed with the
company. Those standards require that we plan and perform our
engagement to express a conclusion on whether we are aware
of any material modifications that need to be made to the Subject
Matter in order for it to be in accordance with the Criteria, and to
issue a report. The nature, timing, and extent of the procedures
selected depend on our judgement, including an assessment of
the risk of material misstatement, whether due to fraud or error.
We believe that the evidence obtained is sufficient and appropriate
to provide a basis for our limited assurance conclusions.
Our independence and quality management
In performing this engagement, we have applied International
Standard on Quality Management (ISQM) 1 Quality Management
for Firms that Perform Audits or Reviews of Financial Statements,
or Other Assurance or Related Services engagements, which
requires that we design, implement and operate a system of quality
management including policies or procedures regarding compliance
with ethical requirements, professional standards and applicable
legal and regulatory requirements.
We have maintained our independence and other ethical
requirements of the Institute of Chartered Accountants of England and
Wales (ICAEW) Code of Ethics (which includes the requirements of the
Code of Ethics for Professional Accountants issued by the International
Ethics Standards Board for Accountants (IESBA)). We are the
independent auditor of the company and therefore we will also comply
with the independence requirements that are relevant to our audit
of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed public interest entities.
Responsibilities of the company
Harbour’s management is responsible for selecting the Criteria, and
for presenting the Subject Matter in accordance with that Criteria,
in all material respects. This responsibility includes establishing and
maintaining internal controls, maintaining adequate records and
making estimates that are relevant to the preparation of the Subject
Matter, such that it is free from material misstatement, whether due
to fraud or error.
Responsibilities of EY for the limited assurance engagement
It is our responsibility to:
plan and perform the engagement to obtain limited assurance
in respect of whether the Subject Matter has not been prepared
in all material respects in accordance with the Criteria;
form an independent conclusion on the presentation of the
Subject Matter on the basis of the work performed and evidence
obtained; and
report our conclusion to the directors of the company.
Our approach
The objective of a limited assurance engagement is to perform such
procedures so as to obtain information and explanations in order to
provide us with sufficient appropriate evidence to express a negative
conclusion on the Subject Matter. The nature, timing and extent
of procedures performed in a limited assurance engagement is
dependent on our judgement, including our assessment of the risk
of material misstatement, and is less in extent than for a reasonable
assurance engagement. Our procedures were only designed to
obtain a limited level of assurance on which to base our conclusion
and do not provide all the evidence that would be required to provide
a reasonable level of assurance.
Although we considered the effectiveness of management’s internal
controls when determining the nature, timing and extent of our
procedures, our assurance engagement was not designed to provide
assurance on internal controls. Our procedures did not include
testing controls or performing procedures relating to checking the
aggregation or calculation of data within IT systems.
A limited assurance engagement consists of making enquiries,
primarily of persons responsible for preparing the Subject Matter
and related information and applying analytical and other
appropriate procedures.
Because a limited assurance engagement can cover a range of
assurance, the detail of our procedures is included below to provide
further context to the nature, timing and extent of our work:
conducted interviews with key personnel to understand the
process for collecting, collating and reporting the Subject Matter
during the reporting period;
analytical review procedures to understand the appropriateness
of the data;
testing, on a limited sample basis, against underlying source
information to check the accuracy and completeness of the data
and the appropriate application of the Criteria; and
assessing the Report for the appropriate presentation of the data
including limitations and assumptions.
We also performed such other procedures as we considered
necessary in the circumstances.
197
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
INDEPENDENT ASSURANCE STATEMENT
CONTINUED
Inherent limitations
Non-financial information is subject to more inherent limitations
than financial information, given the characteristics of the underlying
subject matter. Because there is not yet a large body of established
practice upon which to base measurement and evaluation techniques,
the methods used for measuring or evaluating non-financial
information, including the precision of different techniques, can differ,
yet be equally acceptable. This may affect the comparability between
entities, and over time.
Use of our report
This report is produced in accordance with the terms of our
engagement letter dated 20 November 2024 solely for the
purpose of reporting to the directors of the company in connection
with the Subject Matter for the period ended 31 December 2024.
Those terms permit disclosure on the company’s website, solely
for the purpose of the company showing that it has obtained an
independent assurance report in connection with the Subject Matter.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s
directors as a body, for the procedures performed, for this report,
or for the conclusions we have formed. This engagement is separate
to, and distinct from our appointment as the auditor to the company.
Ernst & Young LLP
6 March 2025
London
198
Harbour Energy plc
Annual Report & Accounts 2024
UK GOVERNMENT PAYMENT REPORTING
FOR THE YEAR ENDED 31 DECEMBER 2024
Basis of preparation
The Reports on Payments to Governments Regulations (UK Regulations) came into force on 1 December 2014 and require UK companies
in the extractive sector to publicly disclose payments made to governments in the countries where they undertake extractive operations.
The aim of the regulations is to enhance the transparency of the payments made by companies in the extractive sector to host
governments in the form of taxes, bonuses, royalties, fees and support for infrastructure improvements.
This consolidated report provides information in accordance with DTR 4.3A in respect of payments made by the company and its subsidiaries
to governments for the year ended 31 December 2024 and in compliance with the Reports on Payments to Governments Regulations 2014
(SI 2014/3209), as amended by the Reports on Payments to Governments (Amendment) Regulations 2015 (SI 2015/1928).
The payments disclosed are based on where the obligation for the payment arose: payments levied at a project level have been disclosed
at a project level and payments levied at a corporate level have been disclosed on that basis.
The payments disclosed are for the 12-month period ending 31 December 2024. The 12 month accounting period includes payments
made by entities acquired from Wintershall Dea after the completion date, 3 September 2024.
Within the UK Regulations, a project is defined as being the operational activities which are governed by a single contract, licence, lease,
concession or a similar legal agreement. The company undertakes extractive activities in different types of fiscal petroleum regimes and
therefore the types of payments disclosed vary from country to country. For the purposes of our reporting, the operational activities which
form the basis of payment obligations towards a governmental authority are governed by a contract, licence, lease, concession or similar
legal agreement. For the UK, individual licences have been grouped into geographical hubs and have been classified as projects.
All of the payments disclosed have been made to national governments, either directly or through a Ministry or Department, or to a national
oil company, who have a working interest in a particular licence. For projects where we are the operator we have disclosed the full payment
made on behalf of the project; where we have a non-operated interest we have not disclosed payments made on our behalf by another party.
In line with the UK Regulations, where a payment or a series of related payments do not exceed $109,844 (£86,000), they have
not been disclosed. Where the aggregate payments made in the period for a project or country are less than $109,844 we have
not disclosed the payments made for this project or country.
Our total economic value generated and distributed to all stakeholders can be found in the Sustainability review on page 55.
Reporting currency:
Payments disclosed in this report have been disclosed in US dollars, consistent with the rest of the 2024 Annual
Report. Where actual payments have been made in a currency other than US dollars, they have been translated using the prevailing
exchange rate when the payment was made.
Production entitlements in barrels:
Includes non-cash royalties and state non-participating interest paid in barrels of oil or gas out
of the Group’s working interest share of production in a licence. The figures disclosed are on a cash paid liftings basis.
Income taxes:
This represents cash tax calculated on the basis of profits including income or capital gains and taxes on production.
Income taxes are usually reflected in corporate income tax returns. The cash payment of income taxes occurs in the year in which the
tax has arisen or up to one year later. Income taxes also include any cash tax rebate received from the government or revenue authority
during the year. Income taxes do not include fines and penalties. In accordance with the UK Regulations, payments made in relation
to sales, employee, environmental or withholding taxes have not been disclosed.
Dividends:
This includes dividends that are paid in lieu of a production entitlement or royalty. It does not include any dividends paid
to a government as an ordinary shareholder.
Royalties:
This represents cash royalties paid to governments during the year for the extraction of oil or gas. The terms of the royalties are
described within our PSCs and can vary from project to project within one country. Export duties paid in kind have been recognised within
the royalties category. The cash payment of royalties occurs in the year in which the tax has arisen.
Bonus payments:
This represents any bonus paid to governments during the year, usually as a result of achieving certain milestones,
such as a signature, discovery or production bonuses.
Licence fees:
This represents licence fees, rental fees, entry fees and other consideration for licences and/or concessions paid for
access to an area during the year (with the exception of signature bonuses which are captured within bonus payments).
Infrastructure improvement payments:
This represents payments made in respect of infrastructure improvements for projects that
are not directly related to oil and gas activities during the year. This can be a contractually obligated payment in a PSC or a discretionary
payment for building/improving local infrastructure such as roads, bridges and ports.
199
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Country
Licence and hub/
company level
Production
entitlements
mmbbls
Production
entitlements
$ millions
Income
taxes
$ millions
Royalties:
cash only
$ millions
Dividends
$ millions
Bonus
payments
$ millions
Licence fees
$ millions
Infrastructure
improvement
payments
$ millions
Total
$ millions
Norway
Corporate
529
529
PL211
1
1
PL211CS
1
1
PL248
1
1
PL248F
1
1
PL248GS
1
1
PL435
1
1
PL836S
2
2
PL836SB
1
1
PL894
1
1
Total
529
10
539
United
Kingdom
Central North Sea
(2)
8
6
Southern North Sea
(4)
3
(1)
East Irish Sea
1
1
Corporate
937
937
Total
931
12
943
Germany
Hemsbünde
1
1
Emlichheim
1
1
Völkersen
2
2
Mittelplate/Dieksand
14
14
Total
18
18
Mexico
Ogarrio
8
8
Block 16
1
1
Block 17
1
1
Block 30
1
1
Total
8
3
11
Argentina
Cuenca Austral
13
13
Neuquén
6
6
Corporate
4
4
Total
4
19
23
Egypt
Disouq
1
13
13
East Damanhur
2
2
Total
1
15
15
Libya
Area 58
9
9
Total
9
9
Indonesia
Natuna Sea Block A
1
66
18
84
Total
1
66
18
84
Vietnam
Chim Sáo
17
17
Corporate
16
10
26
Total
17
16
10
43
Total Group
2
107
1,498
55
25
1,685
UK GOVERNMENT PAYMENT REPORTING
CONTINUED
FOR THE YEAR ENDED 31 DECEMBER 2024
200
Harbour Energy plc
Annual Report & Accounts 2024
Country
Government
Production
entitlements
mmbbls
Production
entitlements
$ millions
Income
taxes
$ millions
Royalties:
cash only
$ millions
Dividends
$ millions
Bonus
payments
$ millions
Licence
fees
$ millions
Infrastructure
improvement
payments
$ millions
Total
$ millions
Norway
The Norwegian Tax Administration
(Skatteetaten)
529
529
Norwegian Offshore Directorate
10
10
Total
529
10
539
United
Kingdom
HM Revenue & Customs
931
931
North Sea Transition Authority
11
11
The Crown Estate
1
1
Total
931
12
943
Germany
Landesamt für Bergbau, Energie &
Geologie; Hannover/Niedersachsen
4
4
Landesamt für Bergbau, Energie
& Geologie Schleswig Holstein
14
14
Total
18
18
Mexico
Fondo Mexicano del Petróleo para la
Estabilización y el Desarrollo (FMP)
8
2
10
Servicio de Administración
Tributaria (SAT)
1
1
Total
8
3
11
Argentina
Ministerio de Energía y Minería
9
9
Dirección Provincial de Rentas/
Provincia del Neuquén
6
6
Agencia de Recaudación Fueguina/
Provincia de Tierra del Fuego
4
4
Administración Federal de
Ingresos Públicos
4
4
Total
4
19
23
Egypt
Egyptian Natural Gas Holding
Company (EGAS)
1
15
15
Total
1
15
15
Libya
NOC Tripoli
9
9
Total
9
9
Indonesia
SKK Migas
1
66
66
Directorate General of Taxes
18
18
Ministry of Energy and Mineral
Resources (MEMR)
Total
1
66
18
84
Vietnam
Petro Vietnam
17
17
HCM Tax Department
16
7
23
Vung Tau Customs office
3
3
Total
17
16
10
43
Total Group
2
107
1,498
55
25
1,685
201
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
GROUP RESERVES AND RESOURCES
FOR THE YEAR ENDED 31 DECEMBER 2024
Oil and gas 2P reserves and 2C resources
1
2P reserves
(working interest)
2P reserves
5
(entitlement)
2C resources
(working interest)
1 January 2024
mmboe
Acquisitions
3
mmboe
Revisions
4
mmboe
Production
mmboe
31 December 2024
mmboe
31 December 2024
mmboe
31 December 2024
mmboe
Norway
Oil and NGLs
179
(7)
172
172
150
Gas
2
297
(12)
285
285
158
Total
477
(19)
458
458
308
UK
Oil and NGLs
183
(3)
(27)
153
153
91
Gas
2
161
9
(28)
142
142
52
Total
343
6
(55)
295
295
143
Argentina
Oil and NGLs
21
(1)
20
20
91
Gas
2
243
(7)
236
236
680
Total
264
(8)
256
256
770
Germany
Oil and NGLs
95
(2)
92
92
16
Gas
2
35
(1)
34
34
27
Total
130
(4)
126
126
43
North Africa
Oil and NGLs
9
(1)
8
6
5
Gas
2
48
(4)
44
30
25
Total
57
(4)
52
36
30
Mexico
Oil and NGLs
40
(1)
39
25
386
Gas
2
8
(0)
8
7
18
Total
48
(1)
47
31
405
Southeast Asia
Oil and NGLs
7
0
(2)
6
4
44
Gas
2
10
0
(2)
8
6
167
Total
18
1
(4)
14
10
211
Total
Oil and NGLs
190
343
(2)
(40)
491
472
783
Gas
2
171
632
9
(55)
758
740
1,127
Total
361
976
7
(94)
1,249
1,212
1,910
1
The volumes in the above table reflect internal estimates. DeGolyer and MacNaughton (D&M) audited by means of independent assessment a substantial proportion of the asset base,
covering 90 per cent of working interest 2P reserves and over 70 per cent of working interest 2C resources. D&M’s opinion on these estimates is as follows: it is D&M’s opinion that the
proved-plus-probable 2P reserves estimates prepared by Harbour on the properties evaluated by D&M, when compared on the basis of working interest millions of barrels of oil
equivalent, in aggregate, do not differ materially from those prepared by D&M and it is D&M’s opinion that the 2C contingent resources estimates prepared by Harbour on the properties
evaluated by D&M, when compared on the basis of working interest millions of barrels of oil equivalent, in aggregate, do not differ materially from those prepared by D&M.
2
Gas volumes are converted to boe using conversion factors of 5.8 mmbtu/boe for 2P reserves. 2C gas volumes are converted to mmboe using 5.8 mmbtu/boe, where gas calorific values
can be meaningfully determined, and 5.6 mscf/boe, where otherwise. Fuel gas is not included in the 2P reserves estimates.
3 Relates to Harbour’s acquisition of the Wintershall Dea assets that completed on 3 September 2024.
4
2P reserves revisions include both changes from re-estimation and additions. The overall revision predominantly reflects additions made for activity in the Elgin and AELE hubs, in the UK,
obtaining approvals in 2024. Revisions based on re-estimates account for less the one per cent change to the reserves volume for the UK and Southeast Asia.
5
Harbour’s net entitlement 2P reserves are lower than its working interest 2P reserves for some assets in Mexico, North Africa and Southeast Asia, reflecting the terms of the production
sharing contracts (PSC) for the relevant assets.
Because of rounding, some totals may not agree exactly with the sum of their component parts.
C0
2
storage 2P capacity and 2C resources
1
2P capacity
million tonnes
31 December 2024
2C resources
2
million tonnes
31 December 2024
Norway
0.4
220.8
UK
390.9
Denmark
25.4
Total
3
0.4
659.2
1
All numbers are representative of Harbour’s working interest.
2
Total includes resources associated with two areas in the Netherlands, where there is currently no storage licence in place. Harbour has a cooperation agreement to evaluate CCS storage
on Q1-B and P6-AB which are subject to production licences. The nature of licensing for CCS in the Netherlands means that storage licences are not required for exploration stage CCS
evaluation where there is a producing licence.
3
The volumes in the above table reflect internal estimates. AGR Energy Services AS (AGR) has provided a competent persons report over the Havstjerne and Luna 2C resources in Norway.
ERCE Equipoise Ltd (EQR) has provided a competent persons report over the Viking 2C resources in the UK. The resources that have been independently assessed amount to c.70 per
cent of the total Harbour storage resources, the independent assessment of these resources is not materially different in the aggregate volume to the internal Harbour estimates for
these assets (<5 per cent).
202
Harbour Energy plc
Annual Report & Accounts 2024
WORLDWIDE LICENCE INTERESTS
AS AT 31 DECEMBER 2024
Europe
Country
Licence/area
Operator
Harbour equity
Associated fields
Associated
discoveries
UK
AELE
Harbour Energy
100%
Drake, Fleming, Hawkins, Maria, Seymour,
Everest, Lomond
Ithaca
32%
Erskine
J-Area
Harbour Energy
67–67.5%
Jade, Jasmine, Joanne, Judy, Talbot
Dunnottar
Greater Britannia Area
Harbour Energy
50–93.8%
Britannia, Brodgar, Callanish, Enochdhu
Gilderoy
NEO Energy
44%
Leverett
Ithaca
26.3%
Alder
Catcher Area
Harbour Energy
50%
Catcher, Burgman, Varadero
Tolmount Area
Harbour Energy
50%
Tolmount
Dana Petroleum
50%
Earn
Beryl Area
Apache
34–49.1%
Beryl, Buckland, Callater, Loirston,
Ness-Nevis fields, Skene, Storr
Elgin-Franklin Area
TotalEnergies
19.3–33.3%
Elgin, Franklin, Glenelg
West of Shetland
Harbour Energy
100%
Solan
bp
7.5–10%
Clair, Schiehallion
Southern North Sea
Harbour Energy
28.8%
Johnston
1
Perenco
28.8%
Ravenspurn North
Shell
8.4%
Galleon
Buzzard
CNOOC
21.7%
Calder
2
Harbour Energy
100%
Nelson
Shell
1.7%
Norway
Dvalin Area
Harbour Energy
55%
Dvalin Nord
Adriana/Sabina
Maria Area
Harbour Energy
40–50%
Bergknapp
Gjøa Hub
Harbour Energy
39–56.7%
Nova, Vega
Vår Energi
20–28%
Gjøa
Gjøa Nord,
Ofelia
Aasta Hansteen Hub
Equinor
10–24%
Snefrid Nord, Snefrid Sor, Luva, Haklang, Irpa
Obelix
Njord Hub
Equinor
27.5–50%
Njord, Bauge, Hyme
Skarv Hub
Aker BP
10–30%
Skarv, Idun, Ærfugl, Ærfugl Nord, Gråsel
Alve Nord, Idun
Nord, Newt,
Storjo
Edvard Grieg Hub
Aker BP
15%
Edvard Grieg, Solveig
Snorre Area
Equinor
1.3–8.6%
Snorre, Tordis, Vigdis, Statfjord Øst, Sygna
Snøhvit
Equinor
2.8%
Germany
Mittelplate
Harbour Energy
100%
Emlichheim
Harbour Energy
100%
Lower Saxony Area
Harbour Energy
20.8–100%
Barrien, Bötersen, Hemsbünde, Rehden,
Staffhorst-Nord, Weißenmoor, Völkersen
BEB Erdgas und Erdöl
GmbH&CoKG
20.8–27.5%
Bötersen Pool, Söhlingen
1
Operated on our behalf by Perenco.
2
Operated on our behalf by Spirit Energy.
Note:
This list is not exhaustive. Harbour also holds a number of operated and non-operated interests in fields across the UK, Norway and Germany that have ceased production
and are in or are entering decommissioning, as well as operated and non-operated exploration and pre-development interests.
203
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
Americas
Country
Licence/area
Operator
Harbour equity
Associated fields
Associated
discoveries
Argentina
Aguada Pichana Este
(APE)
TotalEnergies
22.5-27.3%
Aguada Pichana Este Residual,
Aguada Pichana Este Vaca Muerta
San Roque
TotalEnergies
24.7%
Aguada San Roque, Loma Las Yeguas,
Rincon Chico, San Roque (Vaca Muerta)
Cuenca Marina Austral
(CMA-1)
TotalEnergies
35-37.5%
Ara, Ara South, Antares, Cañadon-Alfa, Aries,
Carina, Fénix, Hidra, Kaus, Vega-Pleyade
Leo, Tauro,
Unicornio,
Sirius, Spica
Mexico
Ogarrio
Harbour Energy
50%
Hokchi
Hokchi Energy
37%
Zama
PEMEX
32.2%
Block 29
Repsol
25%
Polok, Chinwol
Block 30
Harbour Energy
70%
Kan
Note:
This list is not exhaustive. For Mexico, we have only included material licences. Harbour equity is disclosed on a working interest basis rather than net entitlement which is not quoted here.
North Africa
Country
Licence/area
Operator
Harbour equity
Associated fields
Associated
discoveries
Egypt
Disouq Area
DISOUCO
1
100%
Disouq, Sidi Salem SE, Sidi Ghazi, NW Khilala
ED
Harbour Energy
40%
East Damanhour
West Nile Delta
bp
9.5-17.3%
Taurus, Fayoum, Raven (+West), Giza North, Libra
Algeria
Reggane Nord
Groupement Reggane
Nord
2
24%
Kahlouche, Kahlouche Sud, Tiouliline, Sali,
Azrafil Sud-Est, Reggane
Libya
Al-Jurf
Mabruk Oil Operations
12.5%
1
This licence is operated by the DISOUCO joint venture between Harbour Energy and EGAS Egypt National Company resulting in 100 per cent Harbour Energy equity on the licence but
effective equity of only 50 per cent.
2
Groupement Reggane Nord is a joint venture between Harbour Energy (24 per cent), Sonatrach (40 per cent) and Repsol (36 per cent).
Note:
This list is not exhaustive. Harbour also holds a number of non-operated interests in fields in Mauritania that are currently being decommissioned.
Southeast Asia
Country
Licence/area
Operator
Harbour equity
Associated fields
Associated
discoveries
Indonesia
Andaman I
Mubadala Petroleum
20%
Andaman II
Harbour Energy
40%
Timpan, Gayo
South Andaman
Mubadala Petroleum
20%
Layaran,
Tangkulo
Natuna Sea Block A
Harbour Energy
28.7%
Anoa, Gajah Baru, Naga, Pelikan, Bison,
Iguana, Gajah Puteri
Tuna Block
Harbour Energy
50%
Kuda Laut,
Singa Laut
Vietnam
Block 12W
Harbour Energy
53.1%
Chim Sáo, Chim Sáo North, Dua
Note:
Harbour equity is disclosed on a working interest basis rather than net entitlement which is not quoted here.
CCS
Country
Licence/area
Operator
Harbour equity
UK
Viking CCS
Harbour Energy
60%
Acorn
Storegga
30%
Camelot CO
2
Synergia Energy
50%
Poseidon CO
2
Perenco
10%
Norway
Havstjerne CO
2
Harbour Energy
60%
Luna CO
2
Harbour Energy
60%
Snøhvit CO
2
Equinor
2.8%
Denmark
Greenstore CO
2
Harbour Energy
40%
Greensand CO
2
INEOS
40%
Note:
Harbour is also involved in the CO
2
nnectNow project in Germany to develop the Wilhelmshaven ENERGY HUB and has cooperation agreements in place to evaluate CCS storage in the Netherlands.
WORLDWIDE LICENCE INTERESTS
CONTINUED
AS AT 31 DECEMBER 2024
204
Harbour Energy plc
Annual Report & Accounts 2024
GLOSSARY
2C
Contingent resources
2P
Proven and probable reserves
ABP
Associated British Ports
ADR
American depositary receipt
AFE
Authorisation for expenditure
AGM
Annual General Meeting
APS
Announced Pledges Scenario (IEA)
bbl
Barrel
bcf
Billion cubic feet
BMS
Business management system
boe
Barrel(s) of oil equivalent
CCGT
Combined cycle gas turbine
CCS
Carbon capture and storage
CDP
Formerly Carbon Disclosure Project
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CGUs
Cash-generating units
Chrysaor
Chrysaor Holdings Limited and subsidiaries
CMAPP
Corporate major accident prevention policy
CO
2
e
Carbon dioxide equivalent
COO
Chief Operating Officer
COP
Cessation of production
CRROs
Climate-related risks and opportunities
CSA
Conditional share awards
CSRD
Corporate Sustainability Reporting Directive
DD&A
Depreciation, depletion and amortisation
DE&I
Diversity, equity and inclusion
DMA
Double materiality assessment
DRIP
Dividend reinvestment plan
DTA
Deferred tax asset
EBITDA
Earnings before interest, tax, depreciation and amortisation
EBITDAX
Earnings before interest, tax, depreciation, amortisation
and exploration
ECL
Expected credit losses
E&E
Exploration and evaluation
EFF
Exploration financing facility
EIR
Effective interest rate
EMS
Enterprise management system
EPL
Energy Profits Levy
EPS
Earnings per share
ERAPs
Emissions reduction action plans
ESG
Environmental, social and governance
ESOP
Employee stock ownership plan
ESRS
European Sustainability Reporting Standards
EVP
Executive Vice President
EY
Ernst & Young LLP
FCA
Financial Conduct Authority
FEED
Front-end engineering and design
FLNG
Floating Liquefied Natural Gas
FPSO
Floating production, storage and offtake vessel
FRC
Financial Reporting Council
FVLCD
Fair value less cost of disposal
FVOCI
Fair value through other comprehensive income
FVTPL
Fair value through profit or loss
FX
Foreign exchange
FY
Full year
GHG
Greenhouse gas emissions
GJ
Gigajoule
GRI
Global Reporting Initiative
HiPo
High potential incident (Any incident or near miss that could,
in other circumstances, have realistically resulted in one or
more fatalities)
HiPoR
High potential incident rate (The frequency of HiPos
per million worked hours)
HMRC
HM Revenue & Customs
HSES
Health, safety, environment and security
IAS
International Accounting Standards
IASB
International Accounting Standards Board
IEA
International Energy Agency
IFRIC
IFRS Interpretations Committee
IFRS
International Financial Reporting Standards
ILO
International Labour Organization
IOGP
International Association of Oil & Gas Producers
IPIECA
Global oil and gas association for advancing environmental
and social performance across the energy transition
ISAs (UK)
International Standards on Auditing (UK)
ISDA
International Swaps and Derivatives Association
ISO
International Organization for Standardization
JV
Joint venture
205
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
kboepd
Thousand barrels of oil equivalent per day
kgCO
2
e
Kilograms of carbon dioxide equivalent
km
Kilometre
KPI
Key performance indicator
kt
Thousand tonnes
LGBTQ+
Lesbian, gay, bisexual, transgender and queer/questioning
LIBOR
London Inter-Bank Offered Rate
LNG
Liquefied natural gas
LOPC
Loss of primary containment
LTIP
Long Term Incentive Plan
M&A
Mergers and acquisitions
MAH
Major accident hazards
MENA
Middle East and North Africa
mmboe
Million barrels of oil equivalent
mscf
Thousand standard cubic feet
mt
Million tonnes
mtpa
Million tonnes per annum
MW
Megawatt
NBP
National Balancing Point (UK natural gas prices)
NGL
Natural gas liquids
NGO
Non-government organisation
NOK
Norwegian krone
NSTA
North Sea Transition Authority
NTS
National Transmission System
NZE
Net Zero Emissions Scenario (IEA)
OCM
Operating Committee Meetings
OECD
Organisation for Economic Co-operation and Development
OEUK
Offshore Energies UK
OGMP
Oil & Gas Methane Partnership 2.0
OPEC
The Organization of the Petroleum Exporting Countries
PP&E
Property, plant and equipment
ppm-wt
Parts per million by weight
Premier
Premier Oil plc and subsidiaries
PSA
Performance share awards
PSC
Production sharing contract
PSE
Process safety events
RBL
Reserve based lending
RCF
Revolving credit facility
SAYE
Save As You Earn
Scope 1
Direct emissions from owned or operated sources
Scope 2
Indirect emissions from the generation of purchased energy
Scope 3
All indirect emissions (not included in Scope 2) that occur in
the value chain of the reporting company, including both
upstream and downstream emissions
SECR
Streamlined Energy and Carbon Reporting
SIP
Share Incentive Plan
SOFR
Secured Overnight Financing Rate
SPE
Society of Petroleum Engineers
SSP
Shared Socioeconomic Pathways
STEM
Science, technology, engineering and maths
STEPS
Stated Policies Scenario (IEA)
Tcf
Trillion cubic feet
TCFD
Task Force on Climate-related Financial Disclosures
THE
Trading Hub Europe
Therm
A unit for quantity of heat that equals 100,000 British thermal
units. One therm is equal to approximately 100 cubic feet of
natural gas
TRIR
Total recordable injury rate (The number of fatalities, lost
time injuries, substitute work, and other injuries requiring
treatment by a medical professional per million hours worked)
TSR
Total shareholder return
TTF
Title Transfer Facility
UK
United Kingdom
UN SDGs
United Nations Sustainability Development Goals
USD
US dollar
VP
Vice President
WACC
Weighted average cost of capital
Wintershall
Dea
transaction
The acquisition of the Wintershall Dea asset portfolio,
comprising substantially all of Wintershall Dea AG’s
upstream assets which completed on 3 September 2024
GLOSSARY
CONTINUED
206
Harbour Energy plc
Annual Report & Accounts 2024
Non-IFRS measures
Harbour uses certain measures of performance that are not specifically defined under IFRS or other generally accepted accounting
principles (GAAP). These non-IFRS measures, which are presented within the Financial review, are defined below:
Capital investment:
Depicts how much the Group has spent on purchasing fixed assets in order to further its business goals and
objectives. It is a useful indicator of the Group’s organic expenditure on oil and gas assets, and exploration and appraisal assets,
incurred during a period
DD&A per barrel:
Depreciation and amortisation of oil and gas properties for the period divided by working interest production.
This is a useful indicator of ongoing rates of depreciation and amortisation of the Group’s producing assets
EBITDAX:
Earnings before tax, interest, depreciation and amortisation, impairments, remeasurements, onerous contracts and
exploration expenditure. This is a useful indicator of underlying business performance
Free cash flow:
Operating cash flow less cash flow from investing activities (exclusive of net expenditure on business combinations)
less interest and lease payments (principal and interest)
Leverage ratio:
Net debt/last twelve months EBITDAX
Liquidity:
The sum of cash and cash equivalents on the balance sheet and the undrawn amounts available to the Group on our principal
facilities. This is a key measure of the Group’s financial flexibility and ability to fund day-to-day operations
Net debt:
Total revolving credit facility and bonds (net of the carrying value of unamortised fees) less cash and cash equivalents
recognised on the consolidated balance sheet. This is an indicator of the Group’s indebtedness and contribution to capital structure
Operating cost per barrel:
Direct operating costs (excluding over/underlift) for the period, including tariff expense, insurance costs
and mark to market movements on emissions hedges, less tariff income, divided by working interest production. This is a useful indicator
of ongoing operating costs from the Group’s producing assets
Shareholder returns paid:
Dividends plus share buybacks completed in the period are included in this metric which shows the overall
value returned to stakeholders in the period
Total capital expenditure:
Capital investment ‘additions’ per notes 11 and 12 plus decommissioning expenditure ‘amounts used’
per note 21
207
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
ADDITIONAL INFORMATION
Harbour Energy plc
Annual Report & Accounts 2024
SHAREHOLDER INFORMATION
Registrar
All enquiries concerning your shareholding
should be directed to Equiniti:
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
United Kingdom
Website: shareview.co.uk
Share portal
As a shareholder you have direct access
to an online share portal operated by
Equiniti at shareview.co.uk. You can access
the share portal with your Shareholder
Reference Number (SRN) which can be
found on your share certificate. The portal
provides a range of services, free of charge,
to help you to administer your shareholding
quickly and efficiently by allowing you to:
change your address details;
choose to receive electronic shareholder
communications;
set up or amend a dividend mandate
so dividends can be paid directly to
your bank account; and
buy and sell Harbour Energy plc shares
using the dealing service operated
by Equiniti.
E-communications
Shareholders have the option to receive
communications including annual reports
and notices of meetings electronically.
This is a faster, more environmentally
friendly and, for Harbour Energy plc, a
more cost-effective way for shareholders to
receive annual reports and other statutory
communications as soon as they are
available. To register for this service, please
visit the share portal: shareview.co.uk.
You will need your 11 digit Shareholder
Reference Number which can be found
on documents that you have been sent by
Equiniti. Once registered, Harbour Energy plc
will communicate with you via email rather
than post.
Dividends
Details of dividend payments made are
included within the shareholder information
section of the investors area of the
company website: harbourenergy.com.
The company operates a Dividend
Reinvestment Plan (DRIP) which enables
shareholders to buy the company’s shares
on the London stock market with their
cash dividend. Further information about
the DRIP is available from Equiniti.
Shareholder security
Shareholders are advised to be cautious
about any unsolicited financial advice,
including offers to buy Harbour Energy plc
shares at inflated prices, or offers of free
reports about Harbour. More information can
be found at fca.org.uk/consumers/scams
and in the shareholder information section of
the investors area of the company website:
harbourenergy.com.
American Depositary Receipt programme
Harbour Energy plc has a sponsored Level
1 American Depositary Receipt (ADR)
programme which BNY Mellon administers
and for which it acts as Depositary. Each
ADR represents one ordinary share of the
company. The ADRs trade on the US
over-the-counter market under the symbol
HBRIY. When dividends are paid to
shareholders, the Depositary converts such
dividends into US dollars, net of fees and
expenses, and distributes the net amount
to ADR holders.
Registered Depositary Receipt holders
can trade, access account balances
and transaction history, find answers to
frequently asked questions and download
commonly needed forms online at
adrbnymellon.com. To speak directly to
a BNY Mellon representative, please call
1-888-BNY-ADRS (1-888-269-2377) if you
are calling from within the United States.
If you are calling from outside the United
States, please call 001-201-680-6825.
You may also send an email inquiry to
shrrelations@cpushareownerservices.com
or visit the website:
computershare-na.com/bnym_adr.
208
Harbour Energy plc
Annual Report & Accounts 2024
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Registered office
Harbour Energy plc
4
th
Floor
Saltire Court
20 Castle Terrace
Edinburgh
EH1 2EN
Registered number SC234781
Head office
Harbour Energy plc
151 Buckingham Palace Road
London
SW1W 9SZ
Tel: +44 (0)20 7730 1111
harbourenergy.com