Harbour Energy Reports Decline in Profit Amidst North Sea Challenges
Posted 24/08/2023 11:55
Harbour Energy, the largest producer of fossil fuels in the UK's North Sea, has reported a decline in profit, signaling a challenging period for the company. While it generated a substantial profit of £1.2 billion in the first half of 2022, its pre-tax profit for the six months ending in June fell to £337 million. This stark drop is primarily attributed to the decrease in fossil fuel prices, particularly evident in the decline of natural gas prices in the UK.
The adverse impact of lower energy costs has been felt across Harbour Energy's operations, leading to a reduction in profitability. The company sold crude oil for $82 per barrel in the first half of 2022, but this figure dropped to $76 per barrel during the same period this year. Additionally, the price of UK natural gas fell from 69p to 58p per therm over the reported period.
Notably, Harbour Energy's production also experienced a slight decline, with daily output decreasing from 211,000 barrels of oil equivalent to 196,000 barrels. This trend is expected to persist, as the company projects a further reduction in production during the second half of the year due to delays in drilling at one of its UK oil fields. Looking ahead, the estimated production for the entirety of 2023 is anticipated to fall within the range of 185,000 to 195,000 barrels per day.
The introduction of the windfall tax, known as the Energy Profits Levy, has had a significant impact on Harbour Energy's post-tax profits. Despite these challenges, the company remains committed to maximizing the value of its UK oil and gas portfolio. It continues to advance organic development projects and adheres to disciplined capital allocation practices.
Amidst the prevailing uncertainties and challenges posed by the windfall tax and market conditions, Harbour Energy has strategically sought diversification. This diversification is reflected in its investments in exploration ventures in Mexico, Indonesia, and carbon capture and storage projects. Although facing hurdles, Harbour Energy remains resilient and determined to navigate the evolving energy landscape and ensure long-term sustainability.