Harbour Energy more than doubles production in £8.8bn mega-deal

22/12/2023
Harbour Energy HQ

HARBOUR Energy, the UK’s largest oil and gas supplier, has expanded after agreeing to acquire all of Wintershall Dea’s non-Russian assets in a share and cash deal worth $11.2b (£8.82b).

Harbour has long sought to expand into other areas of production, after the Energy Profit Levy (EPL) forced the company to shed 350 of its Aberdeen-based staff.

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The deal with Wintershall Dea will almost triple the company’s current output of 190,000 barrels a day, up to 500,000 barrels a day.

It’s expected to close in the fourth quarter of 2024, with acquired assets including Wintershall Dea’s upstream assets in Algeria, Argentina, Denmark, Egypt, Germany, Libya, Mexico and Norway.

The deal also includes Wintershall Dea’s carbon capture and storage licenses in Europe.

It’s the latest in a number or large oil and gas acquisitions in recent times, including Exxon Mobil’s $60b (£47.26) deal for Pioneer Natural Resources and Chevron’s $53b (£41.75) deal for Hess Corp, both in October.

Harbour are determined to grow over time with this acquisition the fourth it, alongwith its predecessor Chrysaor, hos done since 2017.

“Scale is increasingly important in our sector. Not only for relevance with investors, but also to ensure access to diverse low-cost sources of capital,” Harbour’s Chief Executive Linda Cook told Reuters.

The deal is expected to transform Harbour into “one of the world’s largest and most geographically diverse independendent oil and gas companies”, according to their website.

Cook continued: “Today’s announcement marks Harbour’s fourth major acquisition and the most transformational step yet in our journey to build a uniquely positioned, large-scale, geographically diverse independent oil and gas company.

“The addition of Wintershall Dea’s assets will increase our production to over 500 kboepd, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run. Importantly, the acquisition also advances our energy transition objectives by shifting our portfolio towards natural gas, lowering our GHG emissions intensity and expanding our CCS interests into new European markets.

“I am proud of what we have achieved so far – a testament to the skill, hard work and commitment of our people – including our track record of safe and responsible operations and disciplined capital allocation, which have made this acquisition possible.

“We look forward to completion of the acquisition and welcoming Wintershall Dea employees to Harbour, and to our further growth as we continue to build a global independent oil and gas company of the future. 

Alexander Krane, Harbour’s Chief Financial Officer, added: “The acquisition of Wintershall Dea’s large scale, high quality portfolio will transform our asset base as well as our capital structure. 

“The funding structure we have put together – including the porting of $4.9 billion of low-cost investment grade bonds with a coupon of 1.8 per cent and the issuance of $4.15 billion of equity at a significant premium – will significantly improve our credit rating and deliver a transaction which is accretive on a per share basis across all key metrics. 

“This will materially improve our cost of capital and enable access to broader and lower cost sources of funding, supporting further growth and additional shareholder returns. The increase to our ordinary dividend per share is a first step in this direction.”

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