REG - Harbour Energy PLC - Completion of Wintershall Dea acquisition

Harbour EnergyAnnouncement

03/09/2024 12:30

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240903:nRSC7190Ca&default-theme=true

RNS Number : 7190C  Harbour Energy PLC  03 September 2024

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION

 

 

Harbour Energy plc

("Harbour" or the "Company")

Completion of the Acquisition of the Wintershall Dea asset portfolio

3 September 2024

 

Harbour Energy is pleased to announce that the acquisition of the Wintershall
Dea asset portfolio, comprising substantially all of Wintershall Dea AG's
upstream assets (the "Target Portfolio") (the "Acquisition"), was completed
earlier today ("Completion"). The Acquisition has an effective date of 30 June
2023.

 

A large, global independent oil and gas company

Since its creation in 2014, Harbour has grown to become one of the world's
largest and most geographically diverse independent oil and gas companies.
Following Completion, Harbour is producing c.475,000 barrels of oil equivalent
("boe") per day with significant production in Norway, the UK, Argentina,
North Africa and Germany.

 

Harbour benefits from competitive operating costs and resilient margins as
well as a 2P reserve base of c.1.5 billion boe 1  (#_edn1) , underpinning
material and sustainable free cash flow. In addition, Harbour has c.1.8
billion boe 2  (#_edn2) of 2C resource, providing a broad set of growth
options in support of future production and reserve replacement. These
resources include near-infrastructure opportunities in Norway, unconventional
scalable opportunities in Argentina and conventional offshore projects in both
Mexico and Indonesia.

 

With low emissions intensity of less than 15 kgCO(2)e/boe 3  (#_edn3) ,
targets to reduce GHG emissions and eliminate non-routine flaring, and
involvement in multiple CCS projects under development, Harbour remains
committed to producing oil and gas safely and responsibly to help meet the
world's energy needs.

 

Acquisition funding structure and financial position

In line with prior guidance, Harbour financed the Acquisition through the
issuance of equity with an agreed value of $4.15 billion 4  (#_edn4) , the
transfer of c.$4.9 billion 5  (#_edn5) of euro denominated Wintershall Dea
bonds comprising investment grade and hybrid bonds, and cash consideration of
$2.15 billion.

 

Of the $2.15 billion cash consideration, c.$0.4 billion was satisfied by
agreed adjustments under the Business Combination Agreement. This includes a
pre-completion dividend paid to Wintershall DEA AG funded by cash flow from
the Target Portfolio between the effective date and Completion. The remaining
c.$1.8 billion cash consideration was funded from Harbour's $1.5 billion
bridge facility and c.$0.3 billion of Harbour's existing cash. The bridge
facility will be repaid in part using some of the acquired $0.8 billion of
cash balances within the Target Portfolio.

 

As a result, Harbour's estimated net debt on Completion is c.$4.5 billion.
This reflects:

 

 § $3.8 billion of bonds, comprising $3.3 billion 6  (#_edn6) Wintershall Dea
 investment grade bonds transferred to Harbour and Harbour's existing $0.5
 billion bond. (Note: The c.$1.7 billion 7  (#_edn7) of euro denominated hybrid
 bonds transferred from Wintershall Dea have been reclassified as equity
 following Harbour Energy plc becoming the guarantor of the notes at
 Completion.);
 § c.$1.8 billion of drawings on debt facilities, comprising Harbour's fully
 drawn $1.5 billion bridge facility and c.$0.3 billion of drawn RCF; and
 § $1.1 billion of cash, including $0.8 billion of acquired cash balances 8 
 (#_edn8) from the Target Portfolio and $0.3 billion of cash within Harbour at
 Completion.

Following Completion, and because of the significant improvement to Harbour's
credit quality, Harbour expects its existing Credit Watch positive outlook
with Fitch and S&P to be resolved. Harbour expects to be rated Investment
Grade in due course.

 

2024 guidance and outlook

Harbour today updates its guidance for 2024 to include the impacts of the
Acquisition. The updated guidance reflects 12 months' contribution from
Harbour's legacy assets and four months' contribution from the Target
Portfolio. The proforma equivalent metrics reflecting 12 months' contribution
from Harbour's legacy assets and the Target Portfolio are included as a
reference.

 § Production of 250-265 kboepd; proforma 470-485 kboepd
 § Unit operating costs of $16-$17/boe(( 9  (#_edn9) )); proforma $13-14/boe
 § Total capital expenditure, including production and development,
 exploration and appraisal and decommissioning costs, of c.$1.7 billion 10 
 (#_edn10) ; proforma c.$2.7 billion

 

The above guidance and equivalent proforma metrics are consistent with that
provided independently by Harbour and Wintershall Dea on 8 August 2024.

 

Regarding hedging, for the second half of 2024 11  (#_edn11) , Harbour has
hedged 88 kboepd and 38 kboepd of its European gas and oil production at
$11/mscf (c.90p/therm) and $78/bbl, respectively. For 2025, hedges are in
place covering 79 kboepd and 36 kboepd of its European gas and oil production
at $13/mscf (c.105p/therm) and $77/bbl, respectively. Harbour's full hedging
schedule, including for 2026 and 2027, is set out in the appendix.

 

Shareholder returns

Harbour reiterates its commitment to increase its annual dividend from $200
million to $455 million, of which c.$380 million will be paid to holders of
Harbour's ordinary shares. The balance will be paid to holders of the
non-voting, non-listed convertible ordinary shares with preferential rights
(the "Non-Voting Shares"). For ordinary shareholders, this represents a c.5%
increase from 25 cents per share paid in 2023, to 26.25 cents per share.

 

Readmission and admission of shares to trading and share ownership

Harbour's 770,387,788 existing ordinary shares are expected to be cancelled
and then readmitted, and the 669,714,027 new ordinary shares issued to
BASF 12  (#_edn12) (the "BASF Consideration Shares") are expected to be
admitted, to trading on the main market for listed securities of the London
Stock Exchange and to listing on the Equity Shares (Commercial Companies)
Listing Category of the Official List of the Financial Conduct Authority on 4
September 2024 at 0800 BST ("Admission"). The Company's ordinary shares will
continue to trade under the name Harbour Energy plc with the ticker symbol
"HBR" and ISIN GB00BMBVGQ36.

 

Following Completion, the 1,440,101,815 ordinary shares in Harbour are owned
approximately 53.5% by Harbour's legacy shareholders and 46.5% by BASF. BASF's
ordinary shares in Harbour are subject to a six-month lock-up from Completion.

 

The total number of voting rights in the Company on 3 September 2024 is
1,440,101,815 and may be used by shareholders to determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.

 

The 251,488,211 Non-Voting Shares issued to LetterOne will not be admitted to
listing or trading on any market. In the event that LetterOne's Non-Voting
Shares convert into Harbour ordinary shares within the six months following
Completion, these would be subject to a lock-up period ending six months
following Completion.

 

Following Completion, the Company's total issued share capital of
1,691,590,026 shares, which includes the Non-Voting Shares, is owned
approximately 45.5% by Harbour's legacy shareholders, 39.6% by BASF and 14.9%
by LetterOne.

 

Board of Directors

Harbour is pleased today to welcome two new non-executive directors, Dr.
Hans-Ulrich Engel, the former Deputy CEO, CFO and Chief Digital Officer (CDO)
of BASF, and Dr. Dirk Elvermann, CFO and CDO of BASF, to its board of
directors as nominees of BASF, Harbour's largest shareholder. In addition, Dr.
Engel will join Harbour's Health, Safety, Environment and Security Committee
and Dr. Elvermann will join Harbour's Nomination Committee. 13  (#_edn13)

 

Upcoming events

Harbour's next scheduled market update will be in November when the Company
will issue a Trading & Operations update.

 

In addition, Harbour plans to host a capital markets event in the first half
of 2025.

 

Linda Z Cook, CEO of Harbour Energy, commented

"We are extremely proud to have completed the Wintershall Dea acquisition. It
marks our fourth and most transformational acquisition since we were founded
in 2014, and is another big step forward as we continue to build a large,
global independent oil and gas company focused on the safe and responsible
production of the oil and gas the world still needs.

 

I would like to thank everyone involved for their tremendous efforts in
completing the Acquisition and welcome new colleagues from Wintershall Dea to
Harbour. We look forward to continuing to realise the potential of our company
for all our stakeholders."

 

 Enquiries
 Harbour Energy plc                                   +44 (0) 203 833 2421
 Elizabeth Brooks, Head of Investor Relations

 Brunswick (PR advisors)                              +44 (0) 207 404 5959
 Patrick Handley
 Will Medvei

 Financial advisors on the transaction:
 Barclays (Joint Financial Advisor and Sole Sponsor)  +44 (0) 207 623 2323
 Michael Powell
 Ben Plant

 J.P. Morgan Cazenove (Joint Financial Adviser)       +44 (0) 203 493 8000
 James Janoskey
 Daniel Apa

 

 Harbour Energy corporate brokers:
 Barclays                           +44 (0) 207 623 2323
 Robert Mayhew
 Tom Macdonald

 Jefferies                          +44 (0) 207 029 8000
 Sam Barnett
 Will Soutar

 

 

Appendix: Hedging schedule

         H2 2024                2025             2026             2027
         Volume  Average Price  Volume  Average  Volume  Average  Volume  Average

                                        Price            Price            Price
         mmboe   $/mscf         mmboe   $/mscf   mmboe   $/mscf   mmboe   $/mscf
 EU gas  32      11             29      13       13      10       2       10
         mmbbl   $/bbl          mmbbl   $/bbl    mmbbl   $/bbl    mmbbl   $/bbl
 Oil     14      78             13      77       9       73       0       N/A

 

 

Important Notice

The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and therefore any
persons who are subject to the laws of any jurisdiction other than the United
Kingdom should inform themselves about, and observe, any applicable
requirements. The information disclosed in this announcement may not be the
same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any jurisdiction
outside of the United Kingdom.

 

This announcement is not intended to, and does not constitute, or form part
of, an offer to sell or an invitation to purchase or subscribe for any
securities or a solicitation of any vote or approval in any jurisdiction. This
announcement does not constitute a prospectus or a prospectus equivalent
document.

 

Disclaimer

Barclays Bank PLC, acting through its investment bank ("Barclays"), which is
authorised by the Prudential Regulation Authority (the "PRA") and regulated in
the UK by the FCA and the PRA, is acting exclusively as joint financial
adviser and sole sponsor to the Company and no one else in connection with the
Acquisition and shall not be responsible to anyone other than the Company for
providing the protections afforded to clients of Barclays nor for providing
advice in connection with the Acquisition or any other matter referred to
herein.

 

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), and which is authorised in
the United Kingdom by the PRA and regulated by the PRA and the FCA, is acting
as joint financial adviser exclusively for the Company and no one else in
connection with the Acquisition and will not regard any other person as its
client in relation to the Acquisition and will not be responsible to anyone
other than the Company for providing the protections afforded to clients of
J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation
to the Acquisition or any other matter or arrangement referred to herein.

 

Jefferies International Limited ("Jefferies"), which is authorised and
regulated in the UK by the FCA, is acting exclusively as corporate broker to
the Company and no one else in connection with the Acquisition and shall not
be responsible to anyone other than the Company for providing the protections
afforded to clients of Jefferies nor for providing advice in connection with
the Acquisition or any other matter referred to herein.

 1  (#_ednref1) As at year-end 2023, based on D&M Competent Person's
Report for the Wintershall Dea asset portfolio and Harbour's reported 2P
reserves

 2  (#_ednref2) As at year-end 2023, based on D&M Competent Person's
Report for the Wintershall Dea asset portfolio and Harbour's reported 2C
resources

 3  (#_ednref3) Estimated GHG emissions intensity for 2024 is on a net equity
share basis and reflects 12 months contribution from legacy Harbour assets and
12 months contribution from the Target Portfolio

 4  (#_ednref4) This reflects 921 million shares issued at an agreed value of
360p/share

 5  (#_ednref5) This reflects $1.08/EUR, the average exchange rate during H1
2023 and used at the time of the Acquisition announcement (December 2023)

 6  (#_ednref6) This reflects $1.10/EUR exchange rate as at 31 August 2024

 7  (#_ednref7) This reflects $1.10/EUR exchange rate as at 31 August 2024

 8  (#_ednref8) Estimated at 31 August and reflects $1.10/EUR exchange rate

 9  (#_ednref9) Operating costs comprises production and transportation costs
and tariff income. Assumes an average exchange rate of $1.10/EUR for 2024

 10  (#_ednref10) Assumes an average exchange rate of $1.10/EUR for 2024

 11  (#_ednref11) H2 2024 hedge position is shown on a proforma basis, and
reflects legacy Harbour and the Target Portfolio's combined hedging programme
 

 12  (#_ednref12) BASF Handels-und Exportgesellschaft mit beschränkter
Haftung

 13  (#_ednref13) Dr. Hans-Ulrich Engel is a member of the supervisory board
and Chair of the Audit Committee of DHL Group and Chairman of the Supervisory
Board of the Heinz Hermann Thiele Family Foundation. Dr Engel and Dr.
Elvermann are both members of the Supervisory Board of Wintershall Dea AG.
There is no further information to be disclosed under the requirements of UK
Listing Rule 6.4.8R in relation to these appointments.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQEANNDELALEEA