THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

Harbour Energy plc

("Harbour" or the "Company" or the "Group")

Full year results for the year to 31 December 2025

5 March 2026

Harbour Energy plc today announces its results for the year ended 31 December 2025.

Linda Z Cook, Chief Executive Officer, commented:

"2025 was a year of significant progress for Harbour. We delivered excellent operational performance while maintaining capital discipline and integrating new assets. This drove record production and higher free cash flow against a backdrop of lower commodity prices. In addition, we improved our cost structure, built momentum at our growth projects in Mexico and Argentina, and announced three significant transactions. Together these actions position Harbour's portfolio to deliver higher margin production over the coming years, leading to material growth in free cash flow.

Today we also announced details of our new distributions policy that links shareholder returns directly to free cash flow. The policy strikes the right balance across the commodity price cycle between our commitment to a strong balance sheet, unlocking the potential of our portfolio and delivering attractive shareholder returns. 

2026 is off to a strong start. Production over the first two months of the year averaged 509 thousand barrels per day and we completed the LLOG transaction on 11 February, marking our entry into the US deepwater Gulf. Looking ahead, our focus remains on safety, operational excellence, advancing our growth projects, strengthening the balance sheet and completing the Waldorf and Indonesia transactions."

Excellent operational delivery

§ Record production of 474 kboepd (2024: 258 kboepd), up 84%

§ Unit operating costs reduced by 22% to $12.8/boe (2024: $16.5/boe)

§ Total recordable injury rate (TRIR) of 1.1 per million hours worked (2024: 1.0)

§ New wells and projects online in the UK, Norway, Argentina and Egypt

§ Exploration and appraisal successes in Egypt and Norway

§ 2P reserves and 2C resources of 3.0 bnboe at year end (2024: 3.2 bnboe)

Material strategic progress

§ Appointed operator of the 750 mmboe gross recoverable Zama oil field (Mexico, Harbour 32%) and a new, more capital efficient, phased FPSO-based development plan agreed

§ Construction underway at Southern Energy (Argentina), a 6 mtpa LNG project (Harbour 15%) due to commence operations end 2027

§ Exited Vietnam; announced Indonesia divestments for $215 million with completion expected in Q2 2026

§ Announced $170 million acquisition of Waldorf (UK) with the potential to unlock significant financial synergies including UK tax losses with an expected value of $900 million. Completion expected end Q2 2026

§ Post period end, completed the $3.2 billion LLOG acquisition, securing a fully operated, oil weighted portfolio in the deepwater US Gulf with a long reserve life, a compelling growth outlook and significant running room 

Financial highlights^[1]

§ Realised post-hedge oil and European gas prices of $69/bbl and $13/mscf (2024: $82/bbl and $11/mscf)

§ Increased revenue and other income of $10.3 billion (2024: $6.2 billion) and adjusted EBITDAX of $7.2 billion (2024: $4.1 billion)

§ Increased free cash flow of $1.1 billion (2024: $0.1 billion)

§ Increased adjusted profit after tax of $0.6 billion (2024: $0.4 billion), equating to adjusted earnings per voting ordinary share of 31 cents (2024: 33 cents)

§ Reported loss after tax of $0.2 billion (2024: $0.1 billion), reflecting a 106% effective tax rate and impacted by a $0.3 billion deferred tax charge associated with changes to the UK fiscal regime and $0.7 billion of pre-tax impairments and exploration write-offs in our North Africa, Mexico and CCS portfolios

§ Investment grade credit ratings of Baa2 (negative outlook), BBB- and BBB- (credit watch negative) by Moody's, Fitch and S&P, respectively

Shareholder distributions

Harbour has adopted an updated distributions policy which links shareholder returns directly to free cash flow and strengthens our capital allocation framework across the commodity price cycle. The new policy includes a base dividend and supports deleveraging alongside disciplined investment in attractive organic growth opportunities in the near term. This will underpin future production and free cash flow growth, driving enhanced shareholder returns over time.

§ Since 2022, Harbour has on average returned c.40% of annual free cash flow to shareholders

§ Under the new policy, Harbour will target returning 45-75% of free cash flow each year, including an initial base dividend of 16.10 cents/voting ordinary share ($300 million^[2])

§ While leverage is above 1.0x, Harbour expects to pay out towards the lower end of the range, prioritising debt reduction. As leverage falls below 1.0x, Harbour expects to pay out towards the top end of the range

§ In line with the new policy, Harbour has declared a 2025 final dividend of 8.05 cents/voting ordinary share ($150 million^[3]). This brings total distributions for 2025 to $478 million, representing a c.45% free cash flow payout

2026 guidance and outlook

2026 guidance and outlook is updated to include the impact of the LLOG acquisition and assumes completion of the Indonesia and Waldorf (UK) transactions end Q2 2026:

§ For 2026 Harbour now expects:

-    Production of 475-500 kboepd.  Production to end February averaged 509 kboepd including one month's contribution from LLOG

-    Unit operating costs of c.$14.5/boe

-    Total capital expenditure of $2.2-2.4 billion, reflecting additional expenditure relating to the LLOG and Waldorf acquisitions

-    Free cash flow of c.$0.6 billion^[4], assuming $65/bbl Brent and $11/mscf European gas prices. A $5/bbl change in Brent or $1/mscf change in European gas prices for the full year impacts our 2026 free cash flow by c.$170 million or c.$150 million respectively

§ Beyond 2026:

-    Production is expected to be maintained in the range of 475-500 kboepd through to 2030, supported by total capex of $2.0-2.3 billion per annum with unit operating costs less than $15/boe

-    Annual free cash flow expected to increase to c.$1.0 billion in 2028^[5], driven by the LLOG and Waldorf acquisitions

-    Further free cash flow margin growth expected around the end of the decade, driven by continued growth from the LLOG portfolio and as Harbour's Mexico projects come onstream

-    With anticipated additions to reserves in Argentina, Mexico, Norway and the US Gulf, the 2P reserves replacement ratio for the period year end 2025 to 2028 is projected to be over 100 per cent

-    Net debt on completion of LLOG was $7.2 billion with leverage anticipated to be slightly above Harbour's target of <1.0x at year end 2026, reducing to 1.0x in 2028

 

 

 

 

Enquiries

Harbour Energy plc                                                                         +44 (0) 203 833 2421

Elizabeth Brooks, SVP Investor Relations

Andy Norman, SVP Communications

Email: [email protected]

 

Online presentation for analysts and investors

Management will host a live online presentation for analysts and investors at 9.00am (GMT). The link to register, and the presentation, will be available on www.harbourenergy.com. A replay will be available on Harbour's website shortly after the event.

Forward looking statements

This statement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst Harbour believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond Harbour's control or within Harbour's control where, for example, Harbour decides on a change of plan or strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.

The information contained within this announcement is deemed by Harbour to constitute inside information for the purposes of the UK Market Abuse Regulation. By the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of Harbour is Howard Landes, General Counsel

 

Summary of 2025 performance

Excellent operational execution

In 2025, we delivered production of 474 kboepd (2024: 258 kboepd), at the top end of guidance and split approximately 40 per cent liquids, 40 per cent European natural gas and 20 per cent other natural gas. The 84 per cent increase versus 2024 reflects a full year's contribution from the Wintershall Dea assets, including 169 kboepd from Norway and 73 kboepd from Argentina, and excellent operational execution.

Production was supported by new wells onstream including in the UK, Norway, Argentina and Egypt, the completion of the Fenix project in Argentina and Maria Phase 2 in Norway, as well as continued high reliability across the portfolio. In addition, we saw outperformance from our operated hubs in the UK.

2026 production is expected to increase to between 475-500 kboepd, reflecting contributions from the LLOG and Waldorf portfolios partially offset by managed decline in the UK and the divestment of producing assets in Indonesia and Vietnam. 

Strict cost and capital discipline

In 2025 we reduced our unit operating costs by 22 per cent to $12.8/boe (2024: $16.5/boe). This reflected the addition of the lower cost Wintershall Dea portfolio and the exit from Harbour's higher cost Vietnam business partially offset by a weaker US dollar sterling exchange rate. We also captured early savings as part of the Wintershall Dea integration process and further improved our UK cost base.

2025 capital expenditure including decommissioning spend totalled $2.4 billion (2024: $1.8 billion), with the increase reflecting the addition of the Wintershall Dea assets. The outturn at the lower end of original guidance of $2.4-2.6 billion was driven by high grading and cost efficiency measures across several of our business units including reduced activity in the UK, a pause in drilling in the APE Vaca Muerta gas licence (Argentina), and the reduction of some expenditures in Mexico and across our portfolio of CCS projects.

For 2026, Harbour expects operating costs of c.$14.5/boe and total capital expenditure of $2.2-2.4 billion, reflecting the addition of the LLOG and Waldorf assets.

Safe and responsible operations

2025 saw a slight increase in Harbour's total recordable injury rate to 1.1 per million hours worked (2024: 1.0) as we expanded our operations into new jurisdictions. While there was a reduction in the number of Tier 2 process safety events versus 2024, we recorded one Tier 1 event in Mexico during the year. All safety events continue to be rigorously investigated with learnings shared across the Company to drive improved performance.

In 2025 we delivered a step change in our GHG intensity which reduced to 13 kgCO₂e/boe (2024: 18 kgCO₂e/boe) on a net equity share basis. This was driven primarily by the addition of the lower GHG intensity Wintershall Dea assets alongside the divestment of our Vietnam business and continued decarbonisation efforts. We remain on track to halve our gross operated emissions by 2030 relative to our 2018 baseline.

Maximising the value of our producing assets

The majority of Harbour's capital programme is focused on infrastructure-led opportunities, profitably converting reserves into production and cash flow. These opportunities are typically low risk, high return investments concentrated around our existing production hubs.

In Norway, we completed our operated Maria Phase 2 project on schedule and within budget, marking the first of six Norway subsea developments due onstream during 2025-2027. Production start-up from our operated Dvalin North field is on track for mid-2026, with installation of the subsea infrastructure completed in 2025 and development drilling underway. Subsea installation campaigns were also completed at Alve North and Idun North, both being developed as multi-well tie-backs to Skarv, and at Irpa, a three-well tie-back to Aasta Hansteen. These projects, as well as infill drilling, are expected to maintain current production levels in Norway.

In the UK, investment in 2025 was targeted at our two largest operated hubs, J-Area and the Greater Britannia Area (GBA). At J-Area, Jocelyn South came onstream just three months after discovery in March, production started up from the RK development well in July and successful well interventions were carried out late in the year. Together with strong subsurface performance from Talbot, these activities contributed to the J-Area achieving production rates not seen for over a decade. The GBA satellite fields Callanish and Brodgar also continued to outperform, with Brodgar production supported by plant optimisation and the successful H5 development well. 

In Argentina, at our offshore CMA-1 concession, production was supported by the three-well Fenix project completed in January and a successful Aries platform well workover. Onshore in the Vaca Muerta unconventional shale play, ten 3,000 metre lateral gas wells were drilled with nine new wells completed and connected, supporting production from APE. Drilling resumed in November after a three month pause to align with lower domestic demand requirements.

Elsewhere, development activities across our three production hubs in Germany - Mittelplate, Gas Nord and Emlichheim - continued to provide stable production while in Egypt two Raven West infill wells at West Nile Delta were brought onstream. We also delivered exploration success in Egypt including at West Nile Delta, with the Fayoum-5 and El King gas discoveries, and at Disouq with EZZ-1, which was bought onstream in January 2026, only two months after discovery. 

Progressing our highest return, most competitive projects supporting reserves and future cash flow

In Norway, Harbour continued to progress its pipeline of potential developments and infill wells towards final investment decisions (FIDs). These include the Gjøa subsea satellite projects which are targeting a 2026 FID while development concept studies are underway at Adriana/Sabina, Storjo and Cuvette. Additionally, Harbour made a small discovery close to the Skarv infrastructure in 2025. Post period end, a discovery was made at Omega Sør (Harbour 24 per cent) near the Snorre field and Harbour was awarded nine exploration licences in the APA 2025 licensing round, four as operator and all close to existing infrastructure.

In Mexico, we saw good momentum at the 750 mmboe gross Zama oil field (Harbour 32 per cent) with Harbour being appointed operator and a more capital efficient, phased FPSO-based development plan being agreed. FEED is planned for 2026 ahead of FID. We also increased the gross resource estimate of our operated Kan field (70 per cent Harbour) by 50 per cent to 150 mmboe and are maturing development options ahead of FEED. As operator of Zama and Kan, we see the potential for material synergies across the two projects and for leveraging the offshore technical experience acquired through LLOG.

In Indonesia, Harbour retains its interests in the potential multi-TCF Andaman Sea gas discoveries, where we are evaluating potential development options, including an accelerated, phased development starting at Tangkulo.

In Argentina, Harbour and its partners took FID on Southern Energy SA (SESA, Harbour 15 per cent), a phased, two vessel 6 mtpa LNG project. This marks a significant milestone, providing access to global markets for our extensive Argentinian gas resource. 2025 saw all environmental licences, export permits and RIGI incentives secured for both vessels and all major contracts awarded with construction now underway. Production start-up from the first vessel is on track for end 2027, with the second vessel to commence operations end 2028.  

Also in Argentina, at the San Roque concession (Harbour 25 per cent), Harbour and its partners are in the process of applying for an unconventional licence. This would allow development of the Vaca Muerta black oil shale to commence, starting with a potential 16 well programme later in 2026. With more than 700 mmboe of 2C resources, mainly in the Vaca Muerta shale play, and the potential to add materially to this, Argentina represents the largest single component of Harbour's 2C resources and a significant reserve replacement opportunity for the Company.

As at year end 2025, Harbour's proven and probable (2P) reserves on a working interest basis stood at 1.12 billion boe (2024: 1.25 billion boe), with additions including at CMA-1 in Argentina and J-Area in the UK partially offsetting the impact of production. In addition, Harbour had 1.84 billion boe of 2C resources (2024: 1.91 billion boe). Additions to our 2C resources resulted from the successful appraisal of Kan in Mexico and discoveries in Egypt offset by transfers to 2P reserves and further high grading of our UK and Mexico portfolios. Combined, our 2P and 2C volumes at year end 2025, represented 18 years reserves and resources life^[6].

Harbour's 2P reserves replacement averaged c.250 per cent per annum over the four-year period from year end 2021 to 2025. For 2026, we anticipate at least 150 per cent reserves replacement supported by the expected reserve additions from the LLOG and Waldorf acquisitions.

Building a competitive CCS business

Harbour has a leading CO₂ storage position in Europe with 880 million tonnes of net storage resource, offering the potential for a new source of long-term stable cash flow. In 2025, we continued to mature our most advantaged projects.

At our operated Viking project in the UK (Harbour 60 per cent), FEED was completed in March and the development consent order for the onshore pipeline was approved. We also welcomed the government's intention to provide development funding for Viking up to FID. Key milestones to FID include emitter selection and negotiation of the economic licence to be awarded by the government. 

In Denmark, the high return Greensand Future project (Harbour 40 per cent) is on track to commence commercial operations by early 2027 with an injection rate of c.400 ktpa. Onshore Denmark, Harbour has a 40 per cent operated interest in the onshore Greenstore project which is progressing through the appraisal phase. Seismic acquisition commenced in December, marking a key step towards advancing the project towards development. 

In May, in line with the Havstjerne licence commitment, we delivered a successful CO₂ storage appraisal well in the Norwegian North Sea safely and below budget, confirming the existence of a high quality store.

Active portfolio management

We continue to actively manage our portfolio, ensuring our capital and resources are allocated to our most competitive projects and in line with our strategy. In July we exited our Vietnam business and, in December, we announced the sale of the high cost, sub-scale Natuna Sea Block A field along with the Tuna development project in Indonesia for $215 million, improving the overall quality of our portfolio and accelerating value. We also agreed to exit several early-stage projects in Mexico, including Polok and Chinwol, and CCS licences during the year.

In December, we announced the acquisition of Waldorf in the UK for $170 million. Once completed, this acquisition will help to improve the competitiveness and resilience of our UK business amid ongoing fiscal and regulatory challenges by adding c.$900 million in value through UK tax losses. In addition, upon completion c.$350 million of trapped cash is unlocked, more than covering the purchase price. Completion, which is anticipated by mid-year, is subject to final settlement of all creditors' claims against Waldorf. The transaction is currently being implemented via court approved Restructuring Plans.

Also in December, we announced the acquisition of LLOG for $3.2 billion. Through LLOG, Harbour gains a fully operated, oil weighted portfolio and an exceptional team in one of the world's most prolific oil and gas basins. LLOG adds high margin, long-life assets with a compelling growth profile, underpinned by a deep inventory of high return drilling opportunities. The acquisition completed post period end in February 2026.

Collectively, these transactions demonstrate Harbour's disciplined approach to capital allocation, recycling proceeds into cash flow accretive growth opportunities while enhancing the overall quality of our portfolio.

Significant cash flow generation and strong financial position

Harbour generated free cash flow of $1.1 billion in 2025, a significant increase versus 2024 and c.$0.5 billion above the outlook provided at the start of the year after normalising for commodity prices. This was driven by strong operational execution, rigorous capital discipline and the greater scale and resilience of our portfolio.

Net debt (including funds held in escrow and before unamortised fees) reduced to $4.4 billion at year end 2025 (2024: $4.7 billion). This reflects a weaker USD, which increased the value of our euro-denominated debt by c.$0.6 billion, partly offset by $0.4 billion of net hybrid issuances.  Post period end, on 11 February, we completed the LLOG acquisition, funded through a combination of $0.5 billion of equity and $2.7 billion of cash, including a $1 billion bridge facility and $1 billion three year term loan. As a result, net debt increased to $7.2 billion.  Consistent with our approach on past acquisitions, we will prioritise debt reduction until our leverage returns to target levels.

At year-end 2025, we had a strong hedge position with a mark to market gain of $0.5 billion. For 2026, c.50 per cent of our economic exposure to European gas prices and c.40 per cent of our economic exposure to Brent is currently hedged at $11/mscf and $71/bbl respectively.

Competitive and meaningful shareholder distributions

Following the recent announced transactions, Harbour has updated its distributions policy to a payout ratio approach that links shareholder returns directly to free cash flow and leverage. This change strengthens our capital allocation framework and enhances our resilience to commodity price downturns. It also aligns our policy with our peers.

Since 2022, Harbour has on average returned c.40 per cent of free cash flow to shareholders each year. Under the new policy, we will target returning 45-75 per cent of annual free cash flow, including an initial base dividend of 16.10 cents/voting ordinary share ($300 million^[7]) providing a minimum payout to shareholders, with potential for additional returns. When leverage is above Harbour's target of less than 1.0x, Harbour expects shareholder distributions to be towards the low end of the payout range, prioritising debt reduction and balance sheet strength. As leverage falls below 1.0x, Harbour expects to increase the payout towards the top end of the range which, together with growing free cash flow, is expected to support increasing shareholder returns over time.

In line with the new policy, Harbour has declared a final 2025 dividend of 8.05 cents/voting ordinary share. Combined with the 2025 interim dividend and $100 million share buyback announced in August 2025, distributions for 2025 total $478 million, representing a c.45 per cent free cash flow payout.

Our new policy enables us to distribute a base dividend, prioritise near-term deleveraging and invest in highly attractive, high margin growth opportunities. These investments support future production and increasing free cash flow, driving enhanced shareholder returns over the coming years.

2026 Outlook

We had a strong start to the year. Production over the first two months averaged 509 kboepd including a month's contribution from the LLOG portfolio. Production is expected to average 475-500 kboepd during 2026, a level which can be sustained through the end of the decade given our deep inventory of organic investment opportunities. Unit operating costs for 2026 are guided at c.$14.5/boe and total capital expenditure is now expected to be $2.2-2.4 billion, including growth investment in the LLOG assets.

At $65/bbl Brent and $11/mscf European gas prices, 2026 free cash flow is estimated at c.$0.6 billion^[8].  Looking ahead we expect free cash to increase to c.$1 billion in 2028, as higher margin new volumes replace higher cost, higher tax UK barrels. We anticipate another significant step up in free cash flow around the end of the decade driven by continued growth from the LLOG portfolio and as our Mexico growth projects come onstream.

Our focus for 2026 is on safety and operational excellence, advancing our growth projects, strengthening the balance sheet and completing the Waldorf and Indonesia transactions as we continue to build a more resilient, cash generative business. We are excited about the opportunities ahead and realising the full potential of our company for our shareholders.

 

 

Financial Review

Summary of financial results

	Units	2025	2024
Production and post-hedging realised prices
Production	kboepd	474	258
Crude oil	$/boe	69	82
European gas	$/mscf	13	11
Other gas	$/mscf	4	4
Income statement
Revenue and other income	$ million	10,261	6,226
EBITDAX1	$ million	7,118	4,027
Adjusted EBITDAX1	$ million	7,196	4,146
Profit before taxation	$ million	2,801	1,219
Loss after taxation	$ million	(182)	(93)
Adjusted profit after taxation1	$ million	603	370
Effective tax rate	Per cent	106	108
Adjusted effective tax rate1	Per cent	82	79
Operating costs per barrel1	$/boe	12.8	16.5
Basic loss per ordinary voting share	cents/share	(15)	(10)
Adjusted basic earnings per voting ordinary share1	cents/share	31	33
Other financial key figures
Total capital expenditure1	$ million	2,370	1,828
Operating cash flow	$ million	3,386	1,615
Free cash flow1	$ million	1,066	(118)
Shareholder returns paid1	$ million	545	199
Net debt1	$ million	4,305	4,424
Leverage ratio1	times	0.6	1.1

1 Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

Income statement

	2025	2024
	$ million	$ million
Revenue and other income	10,261	6,226
Cost of operations	(5,564)	(3,613)
EBITDAX1	7,118	4,027
Adjusted EBITDAX1	7,196	4,146
Operating profit	3,490	1,648
Profit before tax	2,801	1,219
Taxation	(2,983)	(1,312)
Loss after tax	(182)	(93)
Adjusted profit after tax1	603	370

 

	2025	2024
	Cents/share	Cents/share
Basic loss per ordinary voting share	(15)	(10)
Adjusted basic earnings per voting ordinary share1	31	33

 

1 Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

Revenue and other income

Total revenue and other income increased to $10,261 million (2024: $6,226 million).

	2025	2024
	$ million	$ million
Revenue and other operating income	10,261	6,226
Crude oil	3,487	2,878
Gas	6,033	2,936
Condensate	511	283
Tariff income and other revenue	60	61
Other operating income	170	68

Revenue earned from hydrocarbon production activities increased to $10,031 million (2024: $6,097 million) after net realised hedging gains of $101 million (2024: $18 million, losses). This increase was mainly driven by higher production volumes and higher post-hedging European natural gas prices, partially offset by lower post-hedging crude oil prices.

Crude oil sales increased to $3,487 million (2024: $2,878 million) after realised hedging gains of $116 million (2024: $32 million). This was driven by higher production volumes partially offset by lower post-hedging crude oil prices of $69/bbl (2024: $82/bbl).

Gas revenue was $6,033 million (2024: $2,936 million), split between European gas revenue of $5,337 million (2024: $2,644 million) including realised hedging losses of $15 million (2024: $50 million) and other gas revenue of $696 million (2024: $292 million). The realised post-hedging price for our European and other gas was $13/mscf (2024: $11/mscf) and $4/mscf (2024: $4/mscf), respectively.

Condensate revenue was $511 million (2024: $283 million) and tariff income and other revenue $60 million (2024: $61 million). Other income amounted to $170 million (2024: $68 million) .

Cost of operations

Cost of operations increased to $5,564 million (2024: $3,613 million) driven primarily by the impact of a full year of the enlarged portfolio. Cost of operations includes operating costs of $2,317 million (2024: $1,612 million) and depreciation, depletion and amortisation expense of $2,907 million (2024: $1,704 million) as discussed below along with over/underlift movements and other items totalling $340 million (2024: $297 million).

	2025	2024
	$ million	$ million
Cost of operations
Field operating costs	2,317	1,612
Depreciation, depletion and amortisation	2,907	1,704
Other	340	297
Operating costs	5,564	3,613
Total operating costs for operating costs per barrel1	2,217	1,555
Operating costs per barrel ($ per barrel)1	12.8	16.5

1 Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

Total operating costs increased to $2,217 million (2024: $1,555 million) driven by the impact of a full year of the acquired portfolio. However, on a unit of production basis, costs have materially reduced at $12.8/boe (2024: $16.5/boe), reflecting the lower cost base of the enlarged portfolio.

Depreciation, depletion and amortisation unit expense, which reflects the current period capitalised costs of producing assets divided by produced volumes, decreased to $16.8/boe (2024: $18.5/boe).

General and administrative expenses

General and administrative expenses amounted to $536 million (2024: $352 million). The increase was driven by the enlarged group, including expansion of our corporate centre, and one-off M&A, restructuring and reorganisation-related transaction costs of $78 million (2024: $119 million) associated with various initiatives and M&A activities across the group. 2024 solely related to costs associated with the Wintershall Dea acquisition.

Impairments and exploration costs

The Group has recognised a net pre-tax impairment charge on property, plant and equipment of $365 million (2024: $352 million). Of this, $41 million (2024: $174 million) was in respect of revisions to decommissioning estimates on mainly non-producing assets with no remaining book value. There was was also an impairment of $35 million (2024: $15 million) associated with the disposal of our Vietnam assets. The remainder largely relates to impairments in the Mexico and North Africa driven by reserves reductions and field performance.

During the year, the Group expensed $306 million (2024: $241 million) of exploration and appraisal activities. This covers exploration write-off expense of $200 million (2024: $173 million) including costs associated with projects in Norway ($22 million, 2024: UK $79 million), licence relinquishments in the UK ($40 million) and Mexico ($107 million, 2024: Norway, $64 million), and $84 million (2024: $40 million) costs primarily associated with carbon capture and storage activities.

EBITDAX¹

EBITDAX¹ was $7,118 million (2024: $4,027 million), with the increase driven by the enlarged group. Adjusted EBITDAX¹ was $7,196 million (2024: $4,146 million), an increase of $3,050 million.

Net financing costs

Finance income amounted to $461 million (2024: $173 million). The increase compared to 2024 is primarily due to realised gains on foreign exchange forward contracts of $191 million and changes in the fair value of foreign exchange derivatives of $109 million.

Finance expenses amounted to $1,150 million (2024: $602 million). This included:

▪     interest expense incurred of $176 million (2024: $78 million) related to debt facilities and bonds;

▪     bank and financing fees of $123 million (2024: $139 million);

▪     unwinding of the discount on decommissioning provisions of $293 million (2024: $221 million);

▪     lease interest of $40 million (2024: $53 million); and

▪     unrealised foreign exchange losses of $485 million (2024: $118 million, gain) which predominantly arose on the Group's tax liabilities and intercompany balances due to the weakening of the US dollar.

 

Earnings and taxation

Loss after tax amounted to $182 million (2024: $93 million loss). This resulted in a loss per ordinary voting share of 15 cents (2024: 10 cents, loss) after taking into account the weighted average number of ordinary voting shares in issue of 1,426 million (2024: 990 million). Adjusted profit after tax was $603 million (2024: $370 million) which resulted in earnings per share of 31 cents (2024: 33 cents).

After taking into consideration $81 million (2024: $15 million) attributable to subordinated notes investors, loss after tax attributable to equity owners of the company amounted to $263 million (2024: $108 million loss attributable to equity owners of the company). Adjusted profit after tax amounted to $603 million (2024: $370 million), an increase of $233 million.

Harbour's tax expense increased to $2,983 million in 2025 (2024: $1,312 million), primarily driven by higher pre-tax profits resulting from the additional earnings contributed by the acquisition and the extension of the UK Energy Profits Levy (EPL). The tax expense comprises a current tax expense of $3,505 million (2024: $1,415 million, expense) and a deferred tax credit of $522 million (2024: $103 million, credit).

The effective tax rate of 106 per cent (2024: 108 per cent) is materially higher than the statutory tax rate of 78 per cent (2024: 78 per cent). This is primarily due to a $311 million deferred tax charge arising from legal enactment of the extension of the EPL in the UK by two years, from 31 March 2028 to 31 March 2030, as well as non-deductible foreign exchange losses and weighting of earnings across the various jurisdictions. The adjusted effective tax rate is 82 per cent (2024: 79 per cent).

Shareholder distributions

A final dividend with respect to 2024 of 13.19 cents per ordinary share was proposed on 6 March 2025 and approved by shareholders at the AGM on 8 May 2025. The dividend was paid on 21 May 2025 to all shareholders on the register as at 11 April 2025, totalling $228 million. An interim dividend was announced on 7 August 2025 at 13.19 cents per share and was paid on 24 September 2025 at a value of $227 million.

The Board is proposing a final dividend with respect to 2025 of 8.05 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 7 May 2026. If approved, the dividend will be paid on 20 May 2026 to shareholders as of 10 April 2026. The ex-dividend date is 9 April 2026. 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 28 April 2026.

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 www.shareview.co.uk/info/drip.

Statement of financial position

		2024
	2025	As restated
	$ million	$ million
Assets
Goodwill	5,062	5,062
Non-current assets, excluding goodwill and deferred taxes	19,797	21,168
Deferred tax assets	121	130
Current assets	3,723	3,640
Assets held for sale	390	277
Total assets	29,093	30,277
Liabilities and equity
Borrowings net of transaction fees	5,151	5,229
Provisions	7,413	7,521
Deferred tax liabilities	6,491	6,177
Lease liabilities	634	792
Other financial liabilities	40	877
Other liabilities	2,944	3,197
Liabilities directly associated with assets held for sale	214	233
Total liabilities	22,887	24,026
Equity	6,206	6,251
Total liabilities and equity	29,093	30,277
Net debt	4,305	4,424

 

Assets

The decrease in total assets of $1,184 million to $29,093 million (2024: $30,277 million, as restated) is mainly as a result of a reduction in property, plant and equipment of $1,368 million, driven by impairment charges of $365 million as well as an increase in depreciation $2,773 million (2024: $1,522 million) relative to additions in the period $1,523 million (2024: $1,059 million). Total assets include assets held for sale in respect of the Indonesia disposal of $390 million (2024: Vietnam $277 million).

Liabilities  

The decrease in total liabilities of $1,139 million to $22,887 million (2024: $24,026 million) is primarily driven by the reduction in the fair value of the Group's other financial liabilities, reducing to $40 million from $877 million, with the net financial instruments moving to a net asset position. Total liabilities included liabilities directly associated with assets held for sale in respect of the Indonesia disposal of $214 million.

The net deferred tax position on the statement of financial position is a liability of $6,370 million (2024: $6,047 million, as restated). This primarily consists of deferred tax liabilities in respect of the future profits which will flow from our accelerated capital allowances of $9,012 million and fair value losses on derivatives $2,739 million, partially offset by deferred tax assets in respect of future tax relief on decommissioning spend of $331 million and tax losses of $194 million.

Equity and reserves

Total equity decreased by $45 million to $6,206 million (2024: $6,251 million). The decrease was driven by shareholder distributions of $545 million (2024: $199 million), offset by the new issuance of subordinated notes in the period of $970 million less the repayment of $558 million of the existing notes. Movements in equity also included favourable post-tax fair value movements on cash flow hedges of $429 million (2024: unfavourable of $166 million), offset by losses on currency translation of $182 million (2024: $130 million, gains) all recognised in other comprehensive income, in addition to the loss for the year.

Net debt

As at 31 December 2025, net debt was $4,305 million (2024: $4,424 million). This consisted of borrowings amounting to $5,366 million (2024: $5,513 million) less unamortised fees of $215 million (2024: $284 million) less cash balances of $846 million (2024: $805 million). During the year, a new $900 million senior bond maturing in 2035 was placed, and partly used to pay the existing $500 million senior bond. The €1,000 million bond due in 2025 was also paid during the year. In addition, Harbour had surety bonds of $726 million (£538 million) at year end which provide cover for decommissioning securities.

As at 31 December 2025, the Group has the ability to fund its near-term debt maturities out to 2028 and, following the latest acquisitions, its investment grade rating was reaffirmed by Moody's (Baa2) and unchanged by Fitch (BBB-). Available liquidity, comprising the undrawn portion of the RCF facility of $2.3 billion (the $3.0 billion facility had not been drawn down and $0.7 billion letters of credit for decommissioning had been drawn) plus cash balances of $0.8 billion (2024: $0.8 billion), was $3.1 billion (2024: $2.7 billion) at the end of the year.

As at 31 December 2025, the leverage ratio¹ was 0.6x (2024: 1.1x) which has decreased primarily as a result of the significant increase in EBITDAX due to a full year of contribution from the acquisition in 2025 versus four months of EBITDAX contribution in 2024. Net debt is marginally lower at $4.3 billion (2024: $4.4 billion).

The balance sheet is in a strong position supported by the RCF facility and investment grade credit ratings.

 

	2025	2024
	$ million	$ million
Leverage ratio1
Net debt	4,305	4,424
EBITDAX	7,118	4,027
Leverage ratio1	0.6 x	1.1 x

1 Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

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 hedging programme as at 31 December 2025 is shown below:

Hedge position	2026	2027	2028
Oil
Total oil volume hedged (thousand bbls)	16,258	7,574	-
- of which swaps	14,159	1,643	-
- of which collars	2,099	5,931	-
Weighted average fixed price ($/bbl)	72.57	68.08	-
Weighted average collar floor and cap ($/bbl)	60.00 - 75.24	60.00 - 76.99	-
Natural gas
Gas volume hedged (thousand boe)	26,483	12,602	1,804
- of which swaps/fixed price forward sales	19,830	5,506	510
- of which zero cost collars	6,653	7,096	1,294
Weighted average fixed price ($/mscf)	11.67	10.92	10.87
Weighted average collar floor and cap ($/mscf)	9.38 - 17.75	8.15 - 14.63	7.95 - 16.00

As at 31 December 2025, our financial hedging programme on commodity derivative instruments showed a pre-tax positive mark-to-market fair value of $493 million (2024: $475 million, negative). 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 positive mark-to-market fair value was $104 million (2024: $198 million, negative). Of this value, $83 million (2024: $173 million) related to the cross-currency interest rate swaps designated as cash flow hedges relating to the euro bonds of €2.6 billion (2024: €2.4 billion) which were hedged at a forward rate of between 1.1017 and 1.1680 (2024: 1.1015 and 1.1209).The remaining $21 million related to FX forward contracts designated as fair value through income statement.

Statement of cash flows¹

	2025	2024
	$ million	$ million
Cash flow from operating activities before tax payments	6,862	3,114
Tax payments	(3,476)	(1,499)
Cash flow from operating activities after tax payments	3,386	1,615
Cash flow from investing activities - capital investment	(1,912)	(1,322)
Cash flow from investing activities - other2	132	89
Operating cash flow after investing activities	1,606	382
Cash flow from financing activities3	(540)	(500)
Free cash flow4	1,066	(118)
Cash and cash equivalents	846	805

¹ Table excludes financing activities related to debt and subordinated notes principal movements.

² Excludes net expenditure on business combinations of $34 million (2024: $1,044 million).

³ Interest, lease interest and capital payments only, excludes shareholder distributions.

⁴ Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

Net operating cash flow before tax was $6,862 million (2024: $3,114 million) reflecting twelve months of the enlarged group. The timing and magnitude of tax payments impacted net cash from operating activities after tax which amounted to $3,386 million (2024: $1,615 million). Tax payments during the year were $3,476 million compared to $1,499 million in 2024 due to the enlarged portfolio.

Cash flow working capital movements were positive $60 million (2024: negative $494 million) as a result of the collection of overdue receivables in Egypt and Mexico acquired as part of the Wintershall Dea transaction.

Capital investment was $1,912 million (2024: $1,322 million) which included property, plant and equipment additions of $1,435 million (2024: $884 million), exploration and evaluation additions of $363 million (2024: $359 million) and other intangible additions of $114 million (2024: $79 million). Cash outflow from financing activities totalled $540 million (2024: $500 million) split between interest payments of $246 million (2024: $181 million) and lease payments of $294 million (2024: $319 million).

Free cash flow was $1,066 million inflow (2024: $118 million outflow).

Shareholder distributions totalled $545 million (2024: $199 million) and consist of dividends paid of $455 million (2024: $199 million) and the repurchase of Harbour's own shares of $90 million (2024: $nil).

Cash and cash equivalent balances were $846 million (2024: $805 million) 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.

	2025	2024
	$ million	$ million
Additions to oil and gas assets	(1,511)	(1,037)
Additions to fixtures and fittings, office equipment and IT software	(63)	(73)
Additions to exploration and evaluation assets	(327)	(398)
Additions to other intangible assets	(45)	(36)
Total capital investment1	(1,946)	(1,544)
Movements in working capital	(47)	140
Capitalised interest	36	18
Capitalised lease depreciation	45	64
Cash capital investment per the cash flow statement	(1,912)	(1,322)

¹ Alternative performance measure - see Glossary for the definition. Reconciliations between adjusted performance measures and reported measures are provided within the Glossary.

During the period, the Group incurred total capital expenditure of $2,370 million (2024: $1,828 million), split by capital investment $1,946 million (2024: $1,544 million), decommissioning spend $374 million (2024: $284 million), and energy transition expenditure $50 million (2024: $nil) respectively.

The majority of the capital investment was concentrated around our existing production hubs, predominantly in Norway and the UK. Refer to the Operational review for more detail.

Principal risks

The directors have identified a number of changes to the principle risks facing the company following the completion of the Wintershall Dea acquisition. This includes elevated risk levels in relation to the lower commodity price environment, physical asset security, cyber security and a somewhat lower risk in relation to the energy transition. Notably, the principal risk recognised in the 2024 Annual Report as 'Integration of acquired businesses' has been retired following the successful completion of the acquisition.

Events after the reporting period

On 11 February 2026 Harbour announced it had completed the acquisition of LLOG Exploration Company LLC for $3.2 billion, marking the Company's strategic entry into the US Gulf of America. Harbour financed the Acquisition through $2.7 billion of cash and the issuance of 174,855,744 new Harbour voting ordinary shares (the Consideration Shares) to LLOG Holdings LLC (the Seller) with an agreed value of $0.5 billion. The cash was funded by a $1.0 billion bridge facility, a $1.0 billion 3-year term loan and $0.7 billion from existing sources of liquidity.

At the time when the financial statements were authorised for issue, the group had not yet completed the accounting for the acquisition of LLOG Exploration Company LLC. The proximity of the completion of the acquisition to the authorisation of the financial statements has meant the fair values of the assets and liabilities have not been finalised. It is also not yet possible to provide detailed information about each class acquired receivables and any contingent liabilities of the acquired entities.

In 2024, the German non-governmental organisation Deutsche Umwelthilfe (NGO) filed a lawsuit against the German mining authority (LBEG) challenging the operating permit of Harbour Energy Germany GmbH (HEGG) for HEGG's Mittelplate field. HEGG is a joined party in this lawsuit. On 26 February 2026, a court of first instance (Schleswig-Holsteinisches Verwaltungsgericht) decided that the operating permit is to be considered invalid during the duration of the main court proceeding. HEGG filed an appeal on 27 February 2026 with the Appellate Court (Schleswig-Holsteinisches Oberverwaltungsgericht). This Court confirmed the receipt of the appeal and stated in writing that its Senate, which will decide on the appeal, assumes that the operations of the drilling and production island Mittelplate will continue until a decision has been determined. Based on this first response by the Appellate Court, and in close alignment with the mining authority, HEGG is focused on continuing safe operations.

Going concern

The directors considered the going concern assessment period to be up to 31 December 2027. 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 $5.3 billion (before unamortised fees), senior term loan $1.0 billion, bridge loan $1.0 billion, subordinated notes of $2.2 billion, and surety bonds of $726 million (£538 million) which provide cover for decommissioning securities. The term and bridge loans were entered into in February 2026 to finance the completion of the LLOG acquisition announced in December 2025.

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 2026 and 2027. When combined with drawn letters of credit and unrestricted cash the headroom is forecasted to be $2.7 billion  2027 which provides a robust liquidity position.

The Group's latest approved business plan underpins the base case going concern assessment and is based upon management's best estimate of forward commodity price curves, production in line with approved asset plans and the ongoing capital requirements of the Group that will be financed by free cash flow, the existing RCF and debt financing arrangements described above.

In addition, Harbour announced the Waldorf transaction in December 2025 which is expected to complete in the second quarter of 2026 which is planned to be financed from existing debt facilities. As part of the going concern assessment, separate base case, sensitivities and reverse stress tests have been run on the enlarged group forecasts, which are supported by Harbour's acquisition due diligence work, and show that the probability of a liquidity deficit or covenant breach is remote.

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.

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 throughout the entire assessment period 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.

Management considers this represents a severe but plausible downside scenario appropriate for assessing going concern and viability.

In this downside scenario when applied to the base case forecast, the Group is forecast to have sufficient liquidity headroom throughout the going concern 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 2027 and has therefore adopted the going concern basis for preparing the financial statements.

By order of the Board,

Alexander Krane
Chief Financial Officer

 

4 March 2026

Financial statements

Consolidated income statement

For the year ended 31 December 2025

		2025	2024
	Note	$ million	$ million
Revenue	4	10,091	6,158
Other operating income	4	170	68
Revenue and operating other income		10,261	6,226
Cost of operations	5	(5,564)	(3,613)
Impairment of property, plant and equipment	5,12	(365)	(352)
Impairment of right-of-use assets	13	-	(20)
Exploration and evaluation expenses and new ventures	5	(106)	(68)
Exploration costs written-off	5	(200)	(173)
General and administrative expenses	5	(536)	(352)
Operating profit		3,490	1,648
Finance income	7	461	173
Finance expenses	7	(1,150)	(602)
Profit before taxation		2,801	1,219
Income tax expense	8	(2,983)	(1,312)
Loss for the year after taxation		(182)	(93)
Loss for the year attributable to:
Equity owners of the company		(263)	(108)
Subordinated notes investors		81	15
		(182)	(93)

 

Loss per share	Note	$ cents	$ cents
Basic
Ordinary shares voting	9	(15)	(10)
Ordinary shares non-voting	9	(17)	(11)
Diluted
Ordinary shares voting	9	(16)	(10)
Ordinary shares non-voting	9	(17)	(11)

 

Consolidated statement of comprehensive income

For the year ended 31 December 2025

	2025	2024
	$ million	$ million
Loss for the year	(182)	(93)
Other comprehensive income
Items that will not be subsequently reclassified to income statement:
Actuarial gains/(losses)	36	(6)
Tax (expense)/credit on actuarial gains/(losses)	(11)	4
Net other comprehensive income/(loss) that will not be subsequently reclassified to income statement	25	(2)
Items that may be subsequently reclassified to income statement:
Fair value gains/(losses) on cash flow hedges	1,181	(545)
Tax (charge)/credit on cash flow hedges	(752)	379
Exchange differences on translation	(182)	130
Net other comprehensive income/(loss) may be subsequently reclassified to income statement	247	(36)
Other comprehensive income/(loss) for the year, net of tax	272	(38)
Total comprehensive income/(loss) for the year	90	(131)
Total comprehensive income/(loss) attributable to:
Equity owners of the company	9	(146)
Subordinated notes investors	81	15
	90	(131)

 

Consolidated balance sheet

For the year ended 31 December 2025

			2024
		2025	As restated
	Note	$ million	$ million
Assets
Non-current assets
Goodwill	10	5,062	5,062
Other intangible assets	11	5,749	5,714
Property, plant and equipment	12	13,210	14,578
Right-of-use assets	13	496	656
Equity accounted investments		7	-
Deferred tax assets	8	121	130
Other receivables	16	126	176
Other financial assets	23	209	44
Total non-current assets		24,980	26,360
Current assets
Inventories	15	398	368
Trade and other receivables	16	1,994	2,322
Other financial assets	23	485	145
Cash and cash equivalents	17	846	805
		3,723	3,640
Assets held for sale	18	390	277
Total current assets		4,113	3,917
Total assets		29,093	30,277
Equity and liabilities
Equity
Share capital	26	171	171
Merger reserve	26	3,728	3,728
Other reserves		229	(18)
Retained earnings		53	807
Equity attributable to equity holders of the company		4,181	4,688
Equity attributable to subordinated notes investors	27	2,025	1,563
Total equity		6,206	6,251
Non-current liabilities
Borrowings	22	4,915	4,215
Provisions	21	6,967	7,024
Deferred tax	8	6,491	6,177
Trade and other payables	20	68	30
Lease liabilities	13	466	551
Other financial liabilities	23	19	415
Total non-current liabilities		18,926	18,412
Current liabilities
Trade and other payables	20	1,424	1,755
Borrowings	22	236	1,014
Lease liabilities	13	168	241
Provisions	21	446	497
Current tax liabilities		1,452	1,412
Other financial liabilities	23	21	462
		3,747	5,381
Liabilities directly associated with the assets held for sale	18	214	233
Total current liabilities		3,961	5,614
Total liabilities		22,887	24,026
Total equity and liabilities		29,093	30,277

 

The following notes form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 4 March 2026 and signed on its behalf by:

 

Alexander Krane

Chief Financial Officer

Consolidated statement of changes in equity

For the year ended 31 December 2025

	Share capital	Merger reserve1	Other reserves (note 24)	Retained earnings	Equity attributable to owners of the company	Equity attributable to subordinated notes investors	Total equity
	$ million	$ million	$ million	$ million	$ million	$ million	$ million
At 1 January 2024	171	271	18	1,093	1,553	-	1,553
Loss the year	-	-	-	(108)	(108)	15	(93)
Other comprehensive income	-	-	(36)	(2)	(38)	-	(38)
Total comprehensive income	-	-	(36)	(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
Dividend paid	-	-	-	(199)	(199)	-	(199)
At 31 December 2024	171	3,728	(18)	807	4,688	1,563	6,251
(Loss)/profit for the year	-	-	-	(263)	(263)	81	(182)
Other comprehensive income	-	-	247	25	272	-	272
Total comprehensive income/(loss)	-	-	247	(238)	9	81	90
Share-based payments	-	-	-	44	44	-	44
Purchase of ESOP trust shares	-	-	-	(15)	(15)	-	(15)
Purchase and cancellation of own shares	-	-	-	(90)	(90)	-	(90)
Dividends paid	-	-	-	(455)	(455)	-	(455)
Distributions to subordinated notes investors	-	-	-	-	-	(58)	(58)
Issuance of subordinated notes	-	-	-	-	-	970	970
Repayment of subordinated notes	-	-	-	-	-	(558)	(558)
Fair value adjustment to subordinated notes	-	-	-	-	-	27	27
At 31 December 2025	171	3,728	229	53	4,181	2,025	6,206

¹ The increase in the merger reserve in 2024 represents the difference between the fair value and nominal value of the shares issued as consideration for the acquisition of the Wintershall Dea business.

 

Consolidated statement of cash flows

For the year ended 31 December 2025

		2025	2024
	Note	$ million	$ million
Net cash inflow from operating activities	30	3,386	1,615
Investing activities
Expenditure on exploration and evaluation assets		(363)	(359)
Expenditure on property, plant and equipment	12	(1,435)	(884)
Expenditure on non-oil and gas intangible assets		(69)	(42)
Expenditure on other intangible assets		(45)	(37)
Acquisition of subsidiaries, net of cash acquired	14	16	(1,044)
Acquisition deposit	16	(100)	-
Disposal deposit	18	50	-
Finance income received		106	76
Other receipts		26	13
Net cash outflow from investing activities		(1,814)	(2,277)
Financing activities
Repurchase of shares		(90)	-
Proceeds from bond issuance net of transaction costs	30	894	1,720
Proceeds from new borrowings - revolving credit facility	30	440	2,225
Proceeds from subordinated notes net of transaction costs	27	970	-
Proceeds from new borrowings - reserves based lending facility	30	-	178
Proceeds from bridge facility	30	-	1,500
Payments of principal portion of lease liabilities		(257)	(265)
Interest paid on lease liabilities		(37)	(54)
Repayment of bonds	30	(1,391)	-
Repayment of subordinated notes	27	(558)	-
Repayment of revolving credit facility	30	(690)	(1,975)
Repayment of reserves based lending facility	30	-	(178)
Repayment of bridge facility	30	-	(1,500)
Repayment of financing arrangement	30	-	(17)
Purchase of ESOP trust shares		(15)	(25)
Interest paid and bank charges		(246)	(181)
Distributions paid to subordinated notes investors	30	(58)	-
Dividends paid to shareholders	32	(455)	(199)
Net cash (outflow)/inflow from financing activities		(1,493)	1,229
Net increase in cash and cash equivalents		79	567
Net foreign exchange difference		(11)	(37)
Reclassification of cash as asset held for sale		(27)	(11)
Cash and cash equivalents at 1 January		805	286
Cash and cash equivalents at 31 December		846	805

 

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 information for the year ended 31 December 2025 and 2024  contained in this document does not constitute statutory accounts of Harbour Energy plc (Harbour or the company), as defined in section 435 of the Companies Act 2006. The financial information for the years ended 31 December 2025 and 2024 have been extracted from the consolidated financial statements of Harbour Energy plc and all its subsidiaries (the Group) which were authorised for issue by the board of directors on 4 March 2026 and will be delivered to the Registrar of Companies in due course. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

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 plc 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 plc personnel, with no change to the executive directorship.

The Group 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 the going concern period that would impact the going concern basis of preparation are remote.

In 2024, the Vietnam Business Unit was classified as an asset held for sale. This sale was completed in July 2025. In 2025, the Indonesia disposal transaction announced in December 2025 was classified as asset held for sale (see note 18).

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 2025. All accounting policies are consistent with those adopted and disclosed in Harbour's 2024  Annual Report & Accounts.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the company and its subsidiaries as at 31 December 2025. 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 five 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 completion date of acquisition or up to the completion 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 arising from finalising acquisition fair values

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. A purchase price allocation (PPA) had been performed and provisional fair values of the identifiable assets and liabilities of Wintershall Dea, and resulting goodwill, were disclosed in Harbour's 2024 Annual Report & Accounts. These were finalised during 2025 and resulted in a change in the fair values of the assets and liabilities and associated goodwill, the reasoning for which is described in note 14. Each of the affected financial statement line items have been restated and the impact is summarised in the following table.

Balance sheet at 31 December 2024

	As previously reported	Adjustments	As restated
	$ million	$ million	$ million
Non-current assets
Goodwill	5,147	(85)	5,062
Property, plant and equipment	14,543	35	14,578
Current assets
Trade and other receivables	2,316	6	2,322
Non-current liabilities
Deferred tax	6,221	(44)	6,177

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 2024 Annual Report & Accounts, with the removal of the defined benefit obligations on the basis of materiality.

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 costs are subject to regular technical, commercial and management review on at least an annual basis to confirm the continued intent to develop, or otherwise extract value from, the discovery. Where this is no longer the case, the costs are immediately expensed. For the carrying value of intangible exploration and evaluation assets see note 11;

▪     The carrying value of property, plant and equipment regarding assessing assets for indicators of impairment (see note 12);

▪     Decommissioning costs in relation to the timing of when decommissioning would occur (see note 21); and

▪     Tax including assessment of risks around tax uncertainties and the recognition of deferred tax assets (see note  8 below).

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 in September 2024. 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, 2C resources 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;

▪     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.

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 gross operated 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 in 2024 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, Governance and Additional information section of the Annual Report and Accounts.

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. 

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.

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 2025, the Group's production plans for existing assets indicated that 44 per cent, 17 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 2025 indicated that the oil and gas assets would experience significant additional depreciation by 2030 and complete depreciation by 2050, 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.

For the current year's impairment testing, the first three years reflect benchmarked consensus and market forward price curves transitioning to a long-term price from 2028. The Harbour scenario utilised real long-term commodity price assumptions from 2028 for Brent crude at $74 per barrel (2024: $78 per barrel), UK NBP gas at 89 pence per therm (2024: 80 pence per therm), and a European gas price at $11.6 per mmbtu. 

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 2026 was $78 per tonne (2024: $72 per tonne), projected to increase to $164 per tonne (2024: $182 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 deviation 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 within the Annual Report and Accounts 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 Current Policies

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 Current Policies Scenario (CPS): pathway based exclusively on existing, enacted energy and climate policies, assuming no new measures or policy intentions are implemented

 

 

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 mmbtu to USD per mscf and applying other known correlation coefficients between the European and UK gas markets. In addition, for the period 2026-2028, 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 2025

			Pre-tax sensitivity (increase)/decrease in carrying value
			$ million
		Carrying value	-10% price to Harbour scenario	IEA Net Zero Emissions by 2050 (NZE)	IEA Stated Policies (STEPS)	IEA Current Policies (CPS)
	Commodity	$ million
Goodwill (note 10)	Crude oil	5,062	171	583	68	53
	Gas		396	1,506	882	121
Oil and gas assets (note 12)	Crude oil	13,114	362	1,028	-	-
	Gas		116	178	85	50

 

 

31 December 2024

			Pre-tax sensitivity (increase)/decrease in carrying value
			$ million
		Carrying value	-10% price to Harbour scenario	IEA Net Zero Emissions by 2050 (NZE)	IEA Stated Policies (STEPS)	IEA Announced Pledges (APS)
	Commodity	$ million
Goodwill (note 10)	Crude oil	5,062	45	928	-	38
	Gas		37	1,431	997	1,114
Oil and gas assets (note 12)	Crude oil	14,493	323	2,528	-	415
	Gas		2	131	89	35

The -10 per cent price curves used in the Harbour scenarios adjust long-term prices from 2026.

Under the -10 per cent price to Harbour scenario for crude, there is a pre-tax impairment to oil and gas assets of $362 million and on goodwill an impairment of $171 million. For gas, there is a pre-tax impairment of $116 million and on goodwill an impairment of $396 million.

For crude, under the IEA NZE 2050 scenario, there is a pre-tax impairment to oil and gas assets of $1,028 million and on goodwill an impairment of $583 million. For gas, there is a pre-tax impairment to oil and gas assets of $178 million and on goodwill an impairment of $1,506 million.

For crude, under the IEA STEPS, there is a pre-tax impairment to oil and gas assets of $nil and on goodwill an impairment of $68 million. For gas, there is a pre-tax impairment to oil and gas assets of $85 million and on goodwill an impairment of $882 million.

For crude, under the IEA CPS, there is a pre-tax impairment to oil and gas assets of $nil and on goodwill an impairment of $53 million. For gas there is a pre-tax impairment to oil and gas assets of $50 million and on goodwill an impairment of $121 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

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 $52 million (2024: $9 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 2025, the Group's post-tax discount rate ranging from 9.0 per cent to 14.5 per cent (2024: 8.8 per cent to 14.5 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 $77 million (2024: $113 million) to the oil and gas assets and on goodwill $32 million (2024: $10 million).

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 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 2025 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 (2024: $10.5 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 1 per cent absolute reduction in the applied discount rates used to assess the final decommissioning obligation, would result in increases to the decommissioning provision of approximately $740 million (2024: $852 million) and $312 million (2024: $286 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.

Portfolio changes

Harbour expensed $142 million of costs in relation to CO2 emissions during 2025 (2024: $75 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.

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 2025 Harbour spent $116 million on CCS activities, capitalising $32 million and expensing $84 million.

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 2025 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 474 kboepd (2024: 258 kboepd), accounting for less than 0.4 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.

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. Note 34 describes the Group's interests in joint arrangements as at 31 December 2025.

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.  

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.

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                                                                        6 to 50 years

▪     Fixtures and fittings                                                 10 to 23 years

▪     Office furniture and equipment                               1 to 13 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.

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

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 costs 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

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs as allowed under IFRS 9 Financial Instruments. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

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

The Group holds subordinated resettable fixed rate notes (subordinated notes). 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 Wintershall Dea acquisition in 2024, the issued subordinated notes were 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 and hedge accounting

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. 

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.

For the purpose of hedge accounting, hedges are classified as:

▪     Fair value hedges when hedging exposure to changes in the fair value of a recognised asset or liability

▪     Cash flow hedges when hedging exposure to variability in cash flows that is attributable to either a particular risk associated with a recognised asset or liability or a highly probable forecast transaction.

Hedge relationships are formally designated and documented at inception, together with the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, the existence at inception of an economic relationship and subsequent measurement of the hedging instrument's effectiveness in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk, the hedge ratio and sources of hedge ineffectiveness. Hedges meeting the criteria for hedge accounting are accounted for as follows:

Fair value hedges

The change in fair value of a hedging derivative is recognised in the income statement. The change in the fair value of the hedged item attributable to the risk being hedged is recorded as part of the carrying value of the hedged item and is also recognised in the income statement, where it offsets. The Group applies fair value hedge accounting when hedging interest rate risk on fixed rate finance debt.

Fair value hedge accounting is discontinued only when the hedging relationship or a part thereof ceases to meet the qualifying criteria. This includes when the risk management objective changes or when the hedging instrument is terminated or exercised. The accumulated adjustment to the carrying amount of a hedged item at such time is then amortised prospectively to the income statement as finance interest expense over the hedged item's remaining period to maturity.

Cash flow hedges

The effective portion of the 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 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.

Cash flow hedge accounting is discontinued only when the hedging relationship or a part thereof ceases to meet the qualifying criteria. This includes when the designated hedged forecast transaction or part thereof is no longer considered to be highly probable to occur, or when the hedging instrument is sold, terminated or exercised without replacement or rollover. When cash flow hedge accounting is discontinued amounts previously recognised within other comprehensive income remain in equity until the forecast transaction occurs and are reclassified to profit or loss. If the forecast transaction is no longer expected to occur, amounts previously recognised within other comprehensive income will be immediately reclassified to profit or loss.

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's acquisition of the Wintershall Dea assets met the conditions to recognise the difference between the fair value and nominal value of the shares issued 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's main share incentive plans allow employees to acquire shares in the parent company, subject to certain criteria, and are classified as equity-settled in accordance with IFRS 2 Share-Based Payments.. 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 with a corresponding increase directly in equity, based on the Group's estimate of shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

Employee benefit trust

Shares held in the Employee Share Ownership Plan (ESOP) to meet the future requirements of the employee share-based payment plans are not included in assets but are reflected at cost as a deduction from retained earnings. No gain or loss is recognised in the income statement on the purchase, issue or cancellation of equity shares.

Recharge arrangements

The Group operates an intercompany recharge mechanism whereby subsidiaries reimburse the parent company for share-based payments granted under IFRS 2. These recharges are directly linked to the share-based payment transactions. Subsidiaries adjust the initial capital contribution when reimbursing the parent company, while the parent company adjusts its investment in the subsidiaries, resulting in nil net impact on the parent company's carrying value of investments. All reciprocal entries are eliminated on consolidation.

Inventories

Consumables and subsea supplies 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. Hydrocarbons, including 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.

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 0.9 per cent and 28.5 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 CO2 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.

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 Group. 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.

Where deferred tax assets are recognised for temporary differences arising between the tax base of the Group's share incentive plans and their carrying value, to the extent that the future tax deduction exceeds the related cumulative IFRS 2 expense, the excess movement on the associated deferred tax balance is dealt with directly in equity. To the extent that the future tax deduction is less than or equal to the cumulative IFRS 2 expense, the movement on the associated deferred tax balance is charged or credited in the income statement.

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.

The Group engages in sleeve and optimisation gas trading activities as part of its broader commodity risk management and commercial strategy. Contracts are evaluated based on their intent and usage. Where contracts are entered into and held for the purpose of generating profit from short-term market movements or dealer margins, they are classified as held for trading and recognised as derivatives. Gains and losses from these derivative contracts related to revenue and costs associated with other contracts that are classified as held primarily for the purpose of being traded are reported on a net basis as other operating income in the consolidated income statement.

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

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.

Amendments issued and effective in the current year

The Group applied for the first-time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2025 (unless otherwise stated).

Lack of exchangeability - Amendments to IAS 21

For annual reporting periods beginning on or after 1 January 2025, Lack of Exchangeability - Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates specifies how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments also require disclosure of information that enables users of its financial statements to understand how the currency not being exchangeable into the other currency affects, or is expected to affect, the entity's financial performance, financial position and cash flows.

The amendments had no impact on the consolidated financial statements.

Standards issued but not yet effective

The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

IFRS 18 Presentation and Disclosure in Financial Statements

In April 2024, the IASB issued IFRS 18, which replaces IAS 1 Presentation of Financial Statements. IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and subtotals. Furthermore, entities are required to classify all income and expenses within the statement of profit or loss into one of five categories: operating, investing, financing, income taxes and discontinued operations, whereof the first three are new.

The standard requires disclosure of newly defined management-defined performance measures, subtotals of income and expenses, and it also includes new requirements for aggregation and disaggregation of financial information based on the identified 'roles' of the primary financial statements and the associated notes.

In addition, narrow-scope amendments have been made to IAS 7 Statement of Cash Flows, which include changing the starting point for determining cash flows from operations under the indirect method, from 'profit or loss' to 'operating profit or loss' and removing the optionality around classification of cash flows from dividends and interest. In addition, there are consequential amendments to several other standards.

IFRS 18, and the amendments to the other standards, are effective for reporting periods beginning on or after 1 January 2027, but earlier application is permitted and must be disclosed. IFRS 18 will apply retrospectively.

The Group is currently working to identify all impacts the amendments will have on the primary financial statements and notes to the financial statements. The initial expected material impacts on Group's financial statements are as follows:

▪     Foreign exchange difference will be classified in the category where the related income and expense form the item giving rising to the foreign exchange difference.

▪     New disclosure will be added: (a) management-defined performance measures; and (b) a reconciliation for each line item in the statement of profit or loss between the restated amounts presented applying IFRS 18 and the amounts previously presented applying IAS 1.

Additional standards issued but not yet effective

Other standards and amendments that are not yet effective and have not been adopted early by the Group include:

▪     Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and 7). The Amendments are effective for annual periods starting on or after 1 January 2026;

▪     Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7). The amendments will take effect for annual reporting periods starting on or after 1 January 2026;

▪     Annual Improvements to IFRS Accounting Standards-Volume 11. The amendments will be effective for reporting periods beginning on or after 1 January 2026; and

▪     IFRS 19 Subsidiaries without Public Accountability: Disclosures. IFRS 19 will become effective for reporting periods beginning on or after 1 January 2027

These standards and amendments are not expected to have a significant impact on the financial statements in the period of initial application and therefore no disclosures have been made.

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. 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. The operating segments are 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.