Harbour Energy : “Harbour” or the “Company” or the “Group”

Harbour Energy plc

"Harbour" or the "Company" or the "Group" Half-year results for the six months to 30 June 2021 23 September 2021

Harbour Energy plc today announces its half-year results for the period ended 30 June 2021. Financial and operational performance is provided on a reported basis with Premier Oil's portfolio included from 31 March 2021.

Highlights

• All share merger between Premier Oil plc ("Premier") and Chrysaor Holdings Ltd ("Chrysaor") completed; integration and realisation of synergies progressing as planned
• Reported production of 151 kboepd (H1 2020: 187 kboepd), impacted by planned maintenance programmes deferred from 2020 into 2021 due toCOVID-19 and unplanned outages, partially offset by three months contribution from the Premier portfolio
• Operating costs per barrel1of $15.6/boe (H1 2020: $10.2/boe), reflecting lower production; total
  capex (including decommissioning spend) of $380 million (H1 2020: $364 million)
• EBITDAX1of $843 million (H1 2020: $920 million); increased profit after tax of $87 million (H1 2020
  loss after tax: $155 million)
• Free cash flow1of $302 million (H1 2020: $475 million), after $206 million of tax payments (H1
  2020 tax receipts: $7 million) largely relating to Chrysaor's 2020 UK activities
• Net debt1, excluding unamortised fees, of $2.6 billion and leverage (net debt/proforma EBITDAX1) of 1.2x at end of June; significant available liquidity in excess of $1 billion
• Steps taken to align the combined portfolio with Harbour's strategy, including the decision to explore the options to exit the Group's Sea Lion project in the Falkland Islands

Outlook

• 2021 reported production guidance of170-180 kboepd reiterated; higher expected production in H2 with maintenance programmes completed, additional wells on-stream and a full contribution from the Premier portfolio
• Ramp up of drilling activity including two rigs in theJ-Area and other units at Tolmount, AELE, Elgin Franklin and Beryl in the UK, and Tuna and Natuna Sea Block A in Indonesia
• Inspection and repair campaign progressing at the Group's Tolmount gas development (UK); first production expected around year end
• Forecast 2021 operating cost and total capital expenditure (including decommissioning spend) unchanged at$15-16/boe and $1.1 billion, respectively
• An update on the Company's strategy and capital allocation plans, including its dividend policy, will be provided at a capital markets day on 9 December 2021

Linda Z Cook, Chief Executive Officer, commented:

"The first half saw us deliver positive free cash flow and execute a significant transaction, whilst

retaining a robust balance sheet. The extended maintenance programmes which impacted our production have completed, drilling activity has returned to pre-COVID-19 levels and the merger integration is progressing well, all underpinning strong future cash flow generation. We remain committed to producing oil and gas safely and responsibly, including our aim to achieve Net Zero by 2035."

Enquiries
Harbour Energy plc	Tel: [phone]
Elizabeth Brooks, Head of Investor Relations

Brunswick

Tel: [phone]

Patrick Handley, Will Medvei

Harbour will host a virtual presentation and Q&A session for investors and analysts at 09:00 (BST) today, 23 September 2021, accessible via our website: www.harbourenergy.com/investors.

1Non-GAAP measures are defined in the Glossary.

HARBOUR ENERGY OVERVIEW

At the end of March the merger between Premier and Chrysaor completed, marking the Group's third significant transaction since 2017. As a result, Harbour is the largest London-listed independent oil and gas company with a cash generative, diversified UK asset base and a global footprint.

Strategy

Harbour's strategy is to continue building a global, diversified oil and gas company while maintaining a strong balance sheet. The Company has safety as its top priority and recognises the importance of addressing the energy transition through execution of Harbour's commitment to Net Zero by 2035. Having grown production from zero to over 150 kboepd since 2017, the Company is now a mid-sized independent oil and gas producer. The intention is to continue reinvesting in our strong portfolio of UK assets while at the same time aiming to establish material production in at least one other region via acquisition of additional, high quality producing assets.

A responsible oil and gas producer

Safe and responsible operations are critical to ensuring Harbour's success and the delivery of its strategy. The Group continues to apply appropriate measures and safeguards to protect its people and operations from COVID-19. Harbour is also committed to achieving Net Zero greenhouse gas emissions by 2035 by minimising its own emissions and offsetting an increasing proportion of its residual emissions year-on-year. In parallel, the Group has continued to progress potential investment opportunities to support a lower carbon economy in the UK, including Carbon Capture and Storage (CCS).

Options for growth and diversification

Harbour has significant opportunities within its UK production base to add reserves and extend field life through infill drilling and well intervention programmes, plant modifications, satellite developments and near field exploration. The majority of Harbour's capex programme is targeted at such projects, which help sustain the Group's production and typically deliver high rates of return.

Outside the UK, the Group's organic growth projects include a 12.39 per cent interest in the Zama unit (Mexico) where Harbour is engaging with partners to advance the project towards an investment decision, and a 50 per cent operated interest in the Tuna discoveries in Indonesia where an appraisal campaign is underway.

Harbour's exploration strategy will be focused on infrastructure led, lower risk opportunities in areas where the Group has an established production footprint. Appraisal of the Talbot discovery in the UK is underway as are preparations to drill the Timpan prospect on the Andaman II licence in Indonesia next year.

The current environment presents opportunities for growth through further acquisitions of cash- generative producing asset packages which the Group evaluates on an ongoing basis. However, safe and successful integration of the Premier assets, including realising the financial and operational synergies of the merger, is the Group's immediate priority. Steps have also been taken to align the enlarged portfolio with Harbour's strategy, including the decision not to proceed with the Sea Lion development in the Falkland Islands and to exit the Group's exploration licence interests in the Ceará Basin in Brazil and the Burgos Basin in Mexico.

A strong financial outlook

Harbour seeks to ensure reliable and predictable cash flows through the commodity price cycle and to protect the business from volatility via a disciplined hedging programme. This, together with a robust balance sheet, provides the Group with the ability to fund reinvestment in its portfolio and shareholder returns whilst retaining the optionality for meaningful, value-accretive transactions.

SUMMARY OF FIRST HALF PERFORMANCE

Group production averaged 151 kboepd (H1 2020: 187 kboepd) for the six-month period to the end of June. The reduction was due to significant planned maintenance deferred from 2020 into 2021 as a result of the COVID-19 pandemic and unplanned outages in addition to natural decline. The contribution from Premier's portfolio from the end of March partially compensated for the reduction which was exacerbated by a six-monthCOVID-19 related drilling break in 2020 across the Group's operated assets. Operating costs for the first half of the year were $15.6/boe (H1 2020: $10.2/boe), impacted by the lower production.

Capital expenditure during the first half was $380 million, largely attributed to drilling activities on Tolmount, J-Area and the Group's non-operated assets in the UK. Drilling activity across Harbour's operated assets has now returned to pre-COVID-19 levels, leading to increased capital expenditure in the second half of the year. The higher drilling activity and completion of the maintenance programmes will support future production levels.

The Group generated $302 million of free cash flow during the first half, after tax payments of $206 million largely relating to Chrysaor's 2020 UK activities. Net debt, excluding unamortised fees, at the end of the period was $2.6 billion while leverage (net debt / proforma EBITDAX) was 1.2x, below the Group's target of 1.5x on average through the commodity price cycle.

Summary of reported production1

	Equity	6 months ended	6 months ended
Europe asset / hub	interest	30 June 2021	30 June 2020
	(%)	(kboepd)	(kboepd)
Greater Britannia Area (GBA)	26-87.5	28	43
J-Area	67-67.5	27	33
Armada, Everest, Lomond & Erskine (AELE)	32-100	23	34
Catcher	50	12	-
East Irish Sea (EIS)	100	3	8
Beryl	34-49	13	18
Buzzard	21.7	12	20
Elgin Franklin	19.3	13	20
Clair	7.5	5	5
Other UK2		8	6
Europe		144	187
International		7	-
Total		151	187

1. Production is provided on a reported basis and reflects three months contribution from the Premier portfolio from the end of March 2021, spread over the six month period. The Premier portfolio includes International (Natuna Sea Block A, Indonesia and Chim Sao, Vietnam), Catcher, a 5.2 per cent interest in Elgin Franklin, Solan and Tolmount.
2. Other UK includes Solan, Schiehallion, Johnston, Ravenspurn North, Galleon, Nelson

OPERATIONAL REVIEW

Group production averaged 151 kboepd to the end of June, split 144 kboepd Europe / 7 kboepd international and 82 kboepd liquids / 69 kboepd gas.

Europe - Operated

Greater Britannia Areaaveraged 28 kboepd net to Harbour for the first half of the year. The reduction was mainly due to planned maintenance activities being deferred from 2020 into the second quarter of 2021, which are now complete. Production was also impacted by water handling constraints on Brodgar and natural decline partially compensated for by additional volumes from the Callanish F5 well which came on-stream in February. The third party Finlaggan field is on track for first production through the Britannia platform before year end, improving the hub's unit operating margins.

The J-Areadelivered 27 kboepd net to Harbour for the first six months of the year. This reflected natural decline and the shut-in of two production wells scheduled for intervention in the second half of the year. J-Area production is supported by a drilling campaign with activity ramping up in the second half of the year. Post period end, Harbour recompleted the S15 well, reinstated production from the previously shut-inJ-06 well and spudded the Jade South exploration well. A second rig arrived at J-Area in July to appraise the Talbot discovery ahead of drilling the near field Dunnottar exploration prospect which is expected to spud in the fourth quarter 2021.

Production from Armada, Everest & Lomond together with the Erskine tieback (AELE) averaged 23 kboepd net to Harbour. This reflected an extended maintenance campaign during May and June. The maintenance activity is now complete and drilling of the LAD infill development well, targeting the East Everest Extension area, began in July.

The Catcher Areaaveraged 24 kboepd net to Harbour during the second quarter, contributing 12 kboepd to the Group's reported production for the period. Well delivery remains in excess of the FPSO nameplate capacity and the gas reinjection trials are having a positive impact on oil production rates. The Group continues to successfully mitigate the build-up of calcium naphthenate and its impact on production efficiency is now significantly reduced. Post period end, the Group approved a three-well programme to drill Catcher North, Laverda and Burgman Far East in 2022.

Harbour's East Irish Seaassets averaged 3 kboepd net to Harbour to the end of June. Production was materially impacted by reliability issues at the Calder platform and the onshore processing terminals during the first quarter and planned maintenance activities during the second quarter.

At the Tolmountgas field development (Harbour 50 per cent), the campaign to inspect and repair the issues identified in certain offshore electrical systems during final commissioning of the platform in July is now well underway. Three of the four development wells have also been drilled. The first two wells were completed within expectations while the third well, which is currently being tested, encountered a shallower gas water contact than anticipated. These results will be incorporated into an updated reservoir model once the fourth well is complete. Project start-up is expected around year end with plateau rates of 20-25 kboepd. Post period end, Harbour sanctioned the Tolmount East development which will comprise a single subsea well tieback to the HGS Tolmount infrastructure. Drilling of the Tolmount East well is scheduled for the second half of 2022.

During the period, Harbour drilled two operated exploration wells in Norway, targeting the Jerv and Ilder prospects on licence PL 973. The wells were unsuccessful and have been plugged and abandoned. Harbour is now evaluating the impact of Jerv and Ilder on the remaining licence potential.

Harbour continues to improve cost and operational performance of its Southern North Sea decommissioning programme. The well plug and abandonment programme continued during the period and a heavy-lift campaign covering the removal of the LOGGS complex, comprising five separate platforms, was safely completed post period end.