Harbour Energy Reports Mixed Results: Revenue Up, But Posts Loss Amid Acquisition Integration
Why we think this is bad
While Harbour Energy has seen significant revenue growth due to the Wintershall Dea acquisition, the company's financial health shows concerning signs. The shift from profit to loss, extremely high effective tax rate of 108%, and substantial decrease in free cash flow are major red flags. The dramatic increase in net debt from $0.2 billion to $4.7 billion is particularly worrying. Despite production increases, these haven't translated into proportional profit growth. The challenges posed by UK tax changes, particularly the Energy Profits Levy, add further pressure. Although the maintained dividend and positive outlook for 2025 offer some reassurance, they don't outweigh the significant financial concerns.
Key Points
- Revenue up 65% to $6.2 billion, EBITDAX up 50% to $4.0 billion
- Loss after tax of $93 million, compared to $45 million profit in 2023
- Effective tax rate at 108%, mainly due to UK Energy Profits Levy
- Free cash flow decreased from $1.0 billion to $0.1 billion
- Net debt increased from $0.2 billion to $4.7 billion
- Production up 40% to 258 kboepd due to Wintershall Dea acquisition
- Maintained dividend policy with final dividend of 13.19 cents per share
- 2025 outlook: production expected to increase to 450-475 kboepd
- Unit operating costs expected to reduce by 15% in 2025
- Challenges include acquisition integration and UK tax changes
Summary
Harbour Energy's full year results for 2024 show a complex financial picture. While revenue increased by 65% to $6.2 billion and EBITDAX rose by 50% to $4.0 billion, largely due to the Wintershall Dea acquisition, the company reported a loss after tax of $93 million. This is a significant shift from the $45 million profit in 2023. The effective tax rate soared to 108%, primarily due to UK-specific items related to the Energy Profits Levy. Free cash flow decreased substantially from $1.0 billion to $0.1 billion, and net debt increased from $0.2 billion to $4.7 billion. On a positive note, production increased by 40% to 258 kboepd, and the company maintains its dividend policy. The outlook for 2025 suggests potential improvements, with expected production increases and cost reductions. However, the integration of newly acquired assets and ongoing tax challenges pose significant risks.