Harbor Energy begins $200 million stock repurchase program as rising oil and gas prices help improve company’s balance sheet
- The company already has a policy in place to pay $200 million in dividends annually
- Last year the group rebounded from a loss of £591m in 2020 to a profit of £76.8m
- Harbor Energy was formed last year through the merger of Chrysaor and Premier Oil
Harbor Energy has begun a stock buyback program to return money to investors as rising energy prices are accelerating a recovery in the company’s finances.
Britain’s largest independent oil and gas producer said it had “irrevocable, non-discretionary” arrangements for its corporate brokers to run the $200 million scheme on its behalf.
The Edinburgh-based group has already adopted a policy of paying the same amount of dividends to shareholders each year, with the first $100 million being handed out in May.
Energy Boom: Since its inception in April 2021, Harbor Energy has benefited from skyrocketing oil and gas prices amid significant turmoil in energy markets
In a statement, the company said it “continues to apply a disciplined and prudent approach to capital allocation, balancing its three priorities of safeguarding the balance sheet, ensuring a robust and diverse portfolio, and providing returns to shareholders.”
Since its formation in April 2021 through the merger of Chrysaor and Premier Oil, the company has benefited from skyrocketing oil and gas prices amid significant turmoil in energy markets.
In its first-ever full-year results as a public company, Harbor reported total sales that rose almost in half year-over-year to $3.62 billion as it was further boosted by higher manufacturing activity.
Thanks to lower depreciation and operating costs rising at a slower pace than revenue, the company rebounded from a loss of £591m in 2020 to a profit of £76.8m last year.
Free cash flow was also up 21 percent to £515 million, which helped the company’s net debt fall by about $600 million since the merger was completed.
Due to the strong performance, the group shortened its expected timeframe to become debt-free by two years. In a subsequent trading update in May, Harbor announced that debt had fallen another $600 million to $1.7 billion.
Harbor said it is on track to meet the full-year production guidance of 195 to 210,000 barrels of oil equivalent per day at a price of $15 to $16 per barrel.
Chief Executive Linda Cook welcomed the company’s “strong start to the year,” adding that it “will continue to invest in high-yield, infrastructure-driven opportunities within our asset base to sustain production while generating material-free cash flow.” .
She added, ‘Together with our robust balance sheet, this gives us significant freedom of choice in future capital allocation.’
But a week later, the company’s share price plummeted after the UK government announced it would impose a windfall tax on the oil and gas industry to help UK consumers with rising energy bills.
Those bills have already skyrocketed over the past year as the easing of Covid-19 restrictions led people to travel more regularly, but Russia’s all-out invasion of Ukraine led to a further escalation in oil and gas costs.
Analysts at Jefferies predict that the new 25 percent levy would increase Harbor’s tax burden by $107 million this year and $268 million in 2023, even after subtracting the capital budget tax break.
Harbor Energy Stocks are down over 19 per cent over the past month but rose 1.6 per cent to 373.7 pence late Thursday afternoon.
Harbor Energy begins $200 million stock repurchase program
Source link Harbor Energy begins $200 million stock repurchase program